Question

Rudy bought 10 shares of fat cat, inc. stock on january 1,2017. rudy paid $20 for each share. at first, it appeared that rudy had made a good investment, as the price of fat cat stock rose to $50 per share on march 1, 2017. however, rumors of corporate wrongdoing soon started to circulate and the price of fat cat began to fall. on august 1, 2017, fat cat, inc. declared bankruptcy and announced that the stockholders should not expect to receive anything on the liquidation of the corporation. what type of loss does rudy have in 2017, if any?

Answer 1

He would would have a short term capital loss of $200 (10 shares at $20 each)

Short term losses are considered losses on assets that have been held for less than 1 year.