Question

Stacy, who is married and sole shareholder of ABC Corporation, sold all of her stock in the corporation for $100,000. Stacy had organized the corporation in 2009 by contributing $225,000 and receiving all of the capital stock of the corporation. ABC Corporation is a domestic corporation engaged in the manufacturing of ski boots. The stock in ABC Corporation qualified as Sec. 1244 stock. The sale results in a(n):

Answer 1

Answer:

ordinary loss of $100,000 and long-term capital loss of $25,000

Explanation:

Up to $100,000 on a joint return of loss realized on disposition of Section 1244 stock is treated as an ordinary loss. So the first $100,000 would be ordinary and the remaining $25,000 would be a LTCL.

Answer 2

Answer:

The sale results in an ordinary loss of $100,000 and long-term capital loss of $25,000.

Explanation:

Stacy, who is married and sole shareholder of ABC Corporation, sold all of her stock in the corporation for $100,000. Stacy had organized the corporation in 2009 by contributing $225,000 and receiving all of the capital stock of the corporation. ABC Corporation is a domestic corporation engaged in the manufacturing of ski boots. The stock in ABC Corporation qualified as Sec. 1244 stock. The sale results in AN ORDINARY LOSS OF $100,000 AND LONG-TERM CAPITAL LOSS OF $25,000.