Ten years ago,Elaine paid $10 per share for 2,000 shares of Lazlo common stock.This year,Elaine learned that Lazlo is in bankruptcy and can pay only 40% of its outstanding debt.What are the tax consequences to Elaine of Lazlo's bankruptcy?

Question

Quizplus · Accepted Answer

Elaine originally invested $20,000 in Lazlo stock (2,000 shares x $10 per share). Since the company is bankrupt and the stock is likely worthless, she can claim a $20,000 long-term capital loss.

Ten Years Ago,Elaine Paid $10 Per Share for 2,000 Shares