Question

Required information The following information applies to the questions displayed below] This year, Jack O. Lantern incurred a $78,000 loss on the worthlessness of his stock in the Creepy Corporation (CC). The stock, which Jack purchased in 2005, met all of the §1244 stock requirements at the time of issue. In December of this year, Jack's wife, Jill, also incurred a $82,100 loss on the sale of Eerie Corporation (EC) stock that she purchased in July 2005 and which also satisfied all of the §1244 stock requirements at the time of issue. Both corporations are operating companies. Assume that they file a joint return. b. Assuming they did not engage in any other property transactions this year, how much of a net capital loss will carry over to next year for Jack and Jill? Capital loss carryover This is a numeric cell, so please enter numbers only.

Answer 1

As per section-1244, The ordinary loss deduction for a married couple filing their return jointly is $100,000 and for the capital gain is $3, 000 which offset the capital gain and ordinary income In the present scenario. The loss incurred by J & J's wife is $160,100 ($78,000+ $82,100) The total deduction allowable is $103,000 ($100,000+ $3,000). The remaining loss of $60,100 is to be treated as capital loss b. They can have a capital loss carried forward of $57,100($60,100-$3,000) to 2006 C. The $69,500 of income will be offset against the ordinary loss of $100,000 and the net operating loss deduction of $30,500 . As a result, none of the $60,100capital loss could be used. The capital loss carry over will be 60,100 Thus Net operating loss: $30,500 Capital loss carry forward $60,100