South-Western Federal Taxation 2019: Individual Income Taxes (Intuit ProConnect Tax Online 2017 & RIA Checkpoint 1 term (6 months) Printed Access Card)
South-Western Federal Taxation 2019: Individual Income Taxes (Intuit ProConnect Tax Online 2017 & RIA Checkpoint 1 term (6 months) Printed Access Card)
42nd Edition
ISBN: 9781337702546
Author: James C. Young, William H. Hoffman, William A. Raabe, David M. Maloney, Annette Nellen
Publisher: Cengage Learning
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Chapter 7, Problem 13DQ
To determine

Find out the relevant tax issues for Person K.

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In late 2008, Leticia invested $100,000 in TechCo, a startup high-tech venture. Although she had great expectations of financial gain, TechCo's efforts were not well received in the market, and the value of its stock plummeted. Four years ago when TechCo declared bankruptcy, Leticia wrote off her $100,000 stock investment as worthless securities. To Leticia's surprise, this year she receives $40,000 from the bankruptcy trustee as a final settlement for her TechCo stock. Leticia now realizes that she probably should not have claimed the loss four years ago because the stock was not completely worthless. However, since the statute of limitations has passed, she does not plan to amend her tax return from four years ago. She also decides that the $40,000 is not income but is merely a recovery of some of her original investment. How do you react to Leticia's plans?
Donna currently owns a large position in Facebook. She originally purchased the stock at $39.50 per share. However, since the last presidential election, she has been concerned about the issues of privacy and risks associated with potential investigations that the company is exposed to. The stock is currently near the all-time high again. She is concerned about losing value because she is going on a two-week vacation and will not be able to initiate trades at that time. She would prefer to sell her stock if the price drops to $165.00. What type of trading strategy can she use to protect her gains? O Place a limit order to sell at $165 now. O Place a stop-loss order at $165 now. O Place a price alert to notify you when the stock trades near $165, so you can place a market order. O Place a price alert to notify you when the stock trades near $165, so you can place a limit order.
Kim purchased 500 shares in Prompt Messenger Services for $12,000 on November 21, 2021. The company went bankrupt on June 12, 2022, with no hope of recovery for the shareholders. On what date is the stock deemed to be worthless and what is the nature of the loss?
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