Unformatted text preview: ort-term" capital loss to deduct from net capital or Section 1231 gains. CPA-01991 Type1 M/C 5. CPA-01991 ARE R03 #1 A-D Corr Ans: A PM#5 R 3-01 Page 45 Jackson, a single individual, inherited Bean Corp. common stock from Jackson’s parents. Bean is a
qualified small business corporation under Code Sec. 1244. The stock cost Jackson’s parents $20,000
and had a fair market value of $25,000 at the parents’ date of death. During the year, Bean declared
bankruptcy and Jackson was informed that the stock was worthless. What amount may Jackson deduct
as an ordinary loss in the current year?
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Becker CPA Review, PassMaster Questions
Lecture: Regulation 3 CPA-01991
Choice "a" is correct. Losses resulting from the sale, exchange or worthlessness of Section 1244
qualifying stock (also called Small Business Stock) are treated as ordinary losses up to $50,000...
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