Question

On May 9, 2016, Calvin acquired 700 shares of stock in Aero Corporation, a new startup company, for $70,000. Calvin acquired the stock directly from Aero, and it is classified as § 1244 stock (at the time Calvin acquired his stock, the corporation had $900,000 of paid-in capital). On January 15, 2018, Calvin sold all of his Aero stock for $7,000. Assume that Calvin is single.

If an amount is zero, enter "0".

As a result of the sale, Calvin has:

Ordinary loss:	$
Short-term capital loss:	$
Long-term capital loss:	$

Answer 1

Ordinary loss:	50000
Short-term capital loss:	0
Long-term capital loss:(70000-50000-7000)	13000

As stock is classfied as per section 1244 conditions has to apply for claiming as ordinary loss for single filing:

investment has to be in a small business

direct loss from sale of stock

ordinary loss for a single filing is limited to 50000

Above 50000 loss has to be treated as long term capital loss.

Since the above conditons are met, 50000 is treated as ordinary loss and 13000 is classified as long term capial loss.