Atkon Corporation acquired 90% of the stock of Beta Corporation three years ago.Both corporations are located in the United States.Beta has been an energy drink producer,but unfortunately has suffered substantial losses due to government fines and lawsuits.All of its revenues had been from the sales of the energy drinks.Beta has now filed for bankruptcy and is closing the business with no assets remaining for shareholders.Atkon Corporation will recognize
A)a long-term capital loss.
B)a short-term capital loss.
C)an ordinary loss.
D)no gain or loss.

Question

Quizplus · Accepted Answer

Since Atkon Corporation owns 90% of Beta Corporation, it meets the requirements for a qualifying ownership percentage and can claim an ordinary loss under IRC section 165(g)(3). This loss is not subject to the limitations of capital loss provisions.

Atkon Corporation Acquired 90% of the Stock of Beta Corporation