Jeannie purchased 1,000 shares in Course Developers for $10,000 on August 11,2016.The company went bankrupt on May 11,2017 with no hope of recovery for the shareholders.On what date is the stock deemed to be worthless and what is the nature of the loss?
A)December 31,2016 short-term loss in 2016.
B)December 31,2017,short-term loss in 2017.
C)December 31,2017,long-term loss in 2017.
D)May 11,2017,short-term loss in 2017.

Question

Quizplus · Accepted Answer

For tax purposes, a stock is considered worthless in the year it becomes completely worthless, which in this case is 2017. The holding period for the stock exceeds one year (from August 11, 2016, to May 11, 2017), making the loss a long-term loss.

Jeannie Purchased 1,000 Shares in Course Developers for $10,000 on August