Question

Billy Barker, a simple taxpayer, had basis in IRC 1244 stock of $150,000. Billy sells the...

Billy Barker, a simple taxpayer, had basis in IRC 1244 stock of $150,000. Billy sells the stock for $60,000. What is his gain or loss ? How much is ordinary? How much is capital?
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Answer #1
Total loss incurred ($150000- $60000) = $       90,000
Ordinary loss limited to as per S1244 = $       50,000 Ordinary loss
Remaining shall be treated as Capital loss ($900000 - $50000) = $       40,000 Capital loss
Therefore,
Ordinary loss = $       50,000
Capital loss = $       40,000
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