Mrs. Tinker paid $78,400 to purchase 15,000 shares of HiFli common stock in 2010. 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?

Question

Quizplus · Accepted Answer

Mrs. Tinker has incurred a capital loss of $78,400, since the loss is on the disposition of a capital asset (the HiFli stock). The loss can offset any capital gains she may have and can also be used to offset up to $3,000 of ordinary income in the current tax year. If the amount of the capital loss exceeds $3,000, the excess can be carried forward to future tax years.

Mrs Tinker Paid $78,400 to Purchase 15,000 Shares of HiFli