Question

Discussion Question 18-15 (LO. 6) Hai, a single taxpayer, invested $75,000 in the stock of Penguin Corporation, which recently declared bankruptcy. Although distressed over the loss of her investment, Hai is relieved that she can claim a $75,000 ordinary (rather than capital) loss deduction. Complete the statement below that outlined Hai's treatment of the stock. Hai is not completely correct about the tax result. If § 1244 applies, Hai will potentially have an ordinary loss of X and a capital loss of

Answer 1

As per the section 1224 the stock are treated under ordinary losses and can claim deduction upto $50000 and can also clam losses under capital loss up to $3000.