A worthless security had a holding period of 6 months when it became worthless on December 10,2013.The investor who had owned the security had a basis of $20,000 for it.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Since the security was held for less than a year, it is considered a short-term capital loss. The investor can deduct the loss up to $3,000 per year against their income, with any excess carried forward to future tax years. Therefore, the correct answer is that the investor has a short-term capital loss of $20,000.

A Worthless Security Had a Holding Period of 6 Months