Question

1. Melaney has had a bad year with her investments. She lent a friend $8,000; the friend did not repay the loan when it was due and then declared bankruptcy. The loan is totally uncollectible. Melaney also was notified by her broker that the Oak corporate bonds she owned became worthless on October 13, 2019. She had purchased the bonds for $22,000 on November 10, 2018. Melaney also had a $60,000 loss on the disposition of § 1244 corporate stock that she purchased several years ago. Melaney is single.

Assuming Melaney’s taxable income before those transaction is $80,000 (no other capital gain or loss). What is Melaney’s taxable income after considering those transactions?

Answer 1

LONG TERM CAPITAL LOSS
Particulars	Amount
Long term capital loss-	$22,000.00
Ordinary loss (under section 1244, only $50,000 is limited )	$50,000.00
Long term capital losses	$10,000.00
total loss	$82,000.00
ADJUSTED GROSS TOTAL INCOME
Particulars	Amount
Taxable income before any adjustments	$80,000.00
Capital loss deduction (only limited to $3,000	($3,000.00)
Ordinary loss (limited under section 1244	($50,000.00)
Total Adjusted Gross Income	$27,000.00
short term capital loss would be $8,000 I hope my workings are enough to understand Thanks in advance for giving me positive ratings for any clarification feel free to comment on it May God bless you and have a wonderful day