Mrs.Tinker paid $78,400 to purchase 15,000 shares of HiFli common stock in 2009.This year,HiFli declared bankruptcy and announced that its stock has no value.What is the tax consequence to Mrs.Tinker of this bad news?
A)$78,400 ordinary abandonment loss
B)$78,400 capital loss
C)No loss recognition until Mrs.Tinker actually disposes of the stock
D)None of the above

Question

Quizplus · Accepted Answer

The loss from the stock becoming worthless is treated as a capital loss for tax purposes, as it is considered a loss from the sale or exchange of a capital asset.

MrsTinker Paid $78,400 to Purchase 15,000 Shares of HiFli Common