On July 20,2008,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 10,2009,Matt purchased an additional 1,000 shares of Orange Corporation stock for $150,000.On September 15,2010,Matt sold the 4,000 shares of stock for $80,000.How should Matt treat the sale of the stock on his 2010 return?

Question

Quizplus · Accepted Answer

Matt can claim an ordinary loss of up to $100,000 on § 1244 stock. The remaining loss is treated as a capital loss. The total loss is $94,000 ($24,000 + $150,000 - $80,000), so he can claim a $100,000 ordinary loss and the remaining $6,000 as a net capital gain.

On July 20,2008,Matt (Who Files a Joint Return)purchased 3,000 Shares