Answer:
tax consequences = $11750
Explanation:
given data
Calvin acquired = 250 shares
startup company = $68,750
paid-in capital = $900,000
Calvin sold = $7,000
solution
we know Conditions according to Section 1244 that is Applicable for the Small Business Stock is here as
(a) Stock is directly purchase from the corporation
(b) Ordinary Loss Treatment is limited to the $50000 or $100000 for the Joint filing
(c) Loss may be from the sale of stock or the worthless stock
(d) and more than $50000 loss is treated capital loss
so here we know that
Calvin Ordinary Loss would be = $50000
remaining loss = $11,750
long term capital loss will be = $68750 - $7000
long term capital loss = 61750
tax consequences= $61750 - 50000
tax consequences = $11750
