Dr.T recently called her tax adviser and indicated that one of her investments had turned sour and now was worthless.Assuming T has no other property transactions during the year, the best possible tax treatment could result from a $30,000 loss from holding which of the following?

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A worthless share of § 1244 stock can be treated as an ordinary loss and deducted up to $100,000 ($50,000 if filing single) per year, which can reduce Dr.T's tax liability. Worthless bonds and nonbusiness debts, however, are classified as capital losses and can only offset capital gains, with a maximum deduction of $3,000 per year for any excess loss. Therefore, holding a worthless share of § 1244 stock would result in the best tax treatment in this situation.

DrT Recently Called Her Tax Adviser and Indicated That One