Galvin Corporation has owned all of the stock of Rialto Corporation for five years.Rialto Corporation has been actively engaged in manufacturing in Kansas,but it is now bankrupt,and the stock is worthless.Galvin Corporation will recognize a long-term capital loss.

Question

Quizplus · Accepted Answer

Galvin Corporation will recognize an ordinary loss, not a capital loss, due to the worthlessness of the stock of a subsidiary that has been engaged in an active trade or business for at least five years.

Galvin Corporation Has Owned All of the Stock of Rialto