Can someone help with this Ninja MCQ (REG) section 1244 stock?

  • Creator
    Topic
  • #191145
    Anonymous
    Inactive

    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?

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  • #636861
    Gabe
    Participant

    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

    #636862
    Anonymous
    Inactive

    @Gabe thank you!!!!

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