A single taxpayer sells 3,000 shares of Section 1244 stock (“small business corporation” stock) at a loss of $125,000. How will this loss be treated on the tax return?a. $125,000 ordinary loss b.$125,
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A single taxpayer sells 3,000 shares of Section 1244 stock (‘small business corporation’ stock) at a loss of $125,000. How will this loss be treated on the tax return?a. $125,000 ordinary loss b.$125,000 capital loss c.$50,000 ordinary loss and $75,000 capital loss d.$100,000 ordinary loss and $25,000 capital loss e.None of the above
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Lucretia April 19, 2023 в 09:56The correct answer is a. $125,000 ordinary loss. Section 1244 stock is a special type of stock that allows investors to deduct losses on their tax return as ordinary losses instead of capital losses. This is designed to provide tax relief for small businesses and their investors. In this case, the taxpayer sold 3,000 shares of Section 1244 stock at a loss of $125,000, which can be deducted as an ordinary loss on their tax return. Therefore, options b, c, d, and e are incorrect.
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