On July 20,2013,Matt (who files a joint return)purchased 3,000 shares of Orange Corporation stock (the stock is § 1244 small business stock)for $24,000.On November 10,2013,Matt purchased an additional 1,000 shares of Orange Corporation stock from a friend for $150,000.On September 15,2014,Matt sold the 4,000 shares of stock for $120,000.How should Matt treat the sale of the stock on his 2014 return?

Question

Quizplus · Accepted Answer

Amount realized (1,000 shares × $30 per share)$ 30,000
Less: basis (150,000)
Recognized loss ($120,000)
STCL ($120,000)
The stock is not § 1244 stock because it was not purchased from the corporation.
Amount realized (3,000 shares × $30 per share)$ 90,000
Less: basis (24,000)
Recognized gain (LTCG)$ 66,000
Hence,Matt has a $54,000 STCL ($120,000 - $66,000).

On July 20,2013,Matt (Who Files a Joint Return)purchased 3,000 Shares