On May 9, 2018, Calvin acquired 250 shares of stock in Hobbes Corporation, a new startup company, for $68,750. Calvin acquired the stock directly from Hobbes, and it is classified as § 1244 stock (at the time Calvin acquired his stock, the corporation had $900,000 of paid-in capital). On January 15, 2020, Calvin sold all of his Hobbes stock for $7,000. Assuming that Calvin is single, determine his tax consequences as a result of this sale
LO.2 On May 9, 2018, Calvin acquired 250 shares of stock in Hobbes Corporation, a new startup company, for $68,750. Calvin acquired the stock directly from Hobbes, and it is classified as § 1244 stock (at the time Calvin acquired his stock, the corporation had $900,000 of paid-in capital). On January 15, 2020, Calvin sold all of his Hobbes stock for $7,000. Assuming that Calvin is single, determine his tax consequences as a result of this sale.
Tax consequences as a result of this sale to Calvin
| Ordinary loss | $50,000 | Ordinary loss limited to $50000 for single |
| Short term capital loss | $0 | Short term capital loss - if its less than one year |
| Long term capital loss | $11,750 |
Value of share acquired - $68750 Less: Selling price -($7000) : Ordinary loss -($50000)
Long term capital loss $11,750 |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
