Bruce, who is single, had the following items for the current year:
? Salary of $80,000.
? Gain of $20,000 on the sale of § 1244 stock acquired two years earlier.
? Loss of $75,000 on the sale of § 1244 stock acquired three years earlier.
? Worthless stock of $15,000. The stock was acquired on February 1 of the prior year and became worthless on January 15 of the current year.
Determine Bruce's AGI for the current year.
A) $27,000
B) $38,000
C) $42,000
D) $47,000
E) None of the above

Question

Quizplus · Accepted Answer

Bruce's AGI is $27,000. The gain on the sale of § 1244 stock is taxed at a maximum rate of 28%, and the loss on the sale of § 1244 stock is deductible as an ordinary loss. The worthless stock is deductible as a capital loss, but only up to the amount of capital gains. Bruce has no capital gains, so the worthless stock deduction is disallowed.

Bruce, Who Is Single, Had the Following Items for the Current