Question

57. Gary and Tom own 100 shares of Rosa Co. stock. Gary acquired the stock for...

57. Gary and Tom own 100 shares of Rosa Co. stock. Gary acquired the stock for $60,000 from Rosa Co. 3 years ago when it was formed. Tom acquired the stock 2 years ago from Julie for $45,000. Gary and Tom are single. Rosa Co. meets all the requirements of Code Sec. 1244. Rosa Co. just went through bankruptcy this year and its stock is completely worthless. What are the tax consequences to Gary and Tom?

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Answer :-

  • This is a case were offers of Rosa Co. can't be sold in market or can be sold at Zero regard.
  • In obligation, we motivated the chance to view it as capital asset we sold for zero an impetus at the latest day of the appraisal year and the adversity developing can be set-off against capital addition in the year.
  • If you have more in capital setbacks than expands, your hardship can balance standard pay up to $3,000.
  • Additional disasters can be passed on forward to future evaluation years. If we have more capital hardship than addition, disaster can be adjusted typical pay up to $3,000.
  • Additional mishaps can be passed on forward to future obligation years.
  • Diminish's Capital incident which can be offset $ 60,000 .
  • Tom's Capital incident which can be adjusted is $ 45,000 .
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