contestada

John and June, husband and wife, have owned Ruby Corporation for a number of years. Their basis in the Ruby stock, which they own jointly, is $200,000. The Ruby stock is Sec. 1244 stock. Ruby Corporation liquidates, and John and June receive the following from the corporation:
accounts receivable, $30,000 FMV; a car, $21,000 FMV; office furniture, $11,000 FMV; and $25,000 in cash.
Required:
1. What is the amount and character of their gain or loss?

Respuesta :

abiolataiwo2015

Answer:

($113,000) recognized loss.

$100,000 ordinary loss under Sec. 1244 and $13,000 long-term capital loss.

Explanation:

$30,000 + $21,000 + $11,000 + $25,000

= $87,000 total distribution

$87,000 - $200,000 = ($113,000) recognized loss

Ordinary loss under Sec. 1244 will be $100,000 and long-term capital loss will be $13,000.

Therefore according to the Sec. 1244 loss ceiling is $100,000 for a married couple filing a joint return, thereby causing the remaining $13,000 to be a long-term capital loss.