[Anonymous]

NINJA Question –

In the current year, Fitz, a single taxpayer, sustained a $48,000 loss on Section 1244 stock in JJJ Corp., a qualifying small business corporation, and a $20,000 loss on Section 1244 stock in MMM Corp., another qualifying small business corporation. What is the maximum amount of loss that Fitz can deduct for the current year?

A.

$50,000 capital loss

B.

$68,000 capital loss

C.

$18,000 ordinary loss and $50,000 capital loss

Correct D.

$50,000 ordinary loss and $18,000 capital loss

So the correct answer is D, I get the 50k of ordinary loss but what about the 3K limit on capital losses for individuals. A bit confused. Can someone explain why the entire 18k of capital loss is not subject to the 3k limit?

[Gabe]

We discussed this question up in the REG thread…basically I think it's a poorly worded answer. The question is testing that you know what the thresholds are…technically the answer should read: 50 ordinary loss, 3 cap, 15 CF. Check out page…10 (perhaps) of the REG thread.

CPA, CFE
CISA- Experience will be completed by August 2016

[Anonymous]

@Gabe thank you!!!!

[Author]

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