Sam and Steve have equal interests in the capital and profits of the S&S Partnership and are unrelated.On August 31,2011,Sam sold 250 shares of Tourmaline Corporation to the partnership for its fair market value of $7,500.Sam had bought the stock in 2000 at a cost of $12,000.What is Sam's deductible loss for 2011 as a result of the sale of this stock?

Question

Quizplus · Accepted Answer

Sam sold the stock in 2011 for $7,500 and had purchased it in 2000 for $12,000, resulting in a long-term capital loss of ($12,000 - $7,500) = $4,500. This loss is deductible on Sam's tax return. Since Sam is an individual and not a trader in securities, the loss is treated as a capital loss rather than an ordinary loss. Choice C is the correct answer.

Sam and Steve Have Equal Interests in the Capital and Profits