Did the answer say A was Ordinary Loss or Capital Loss ?
I am wondering when did the stock become worthless. Was it before the father died or after? I think if it was before then the loss should be part of this estate.
For Sec 1244
1. Must be original holder of the stock
2. Stock can be common or preferred
3. Ordinary loss limit is 50,000.00 – Single or 100,000 Married
Notes from IRS—-
Worthless Securities
Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. This affects whether your capital loss is long term or short term. See Holding Period , later.
From IRS….
Worthless securities also include securities that you abandon after March 12, 2008. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift.
If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. Do not deduct them in the year the stock became worthless.
FAR 05/27/14; 786/110 - Done !
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