need help with this question. It concerns 2015 Federal income Tax. Moving to ano

Question

need help with this question. It concerns 2015 Federal income Tax.

Moving to another question will save this response. On February 20. 2014. Bill purchased stock in Pink Corporation (the stock is not small business stock) for dollar 1,000. On May 1. 2015. the stock became worthless. During 2015. Bill also had an dollar 8,000 loss on S1244 small business stock purchased two years ago. A dollar 9,000 loss on a nonbusiness bad debt, and a dollar 5,000 long-term capital gam. How should Bill treat these items on his 2015 tax return? Dollar 4,000 long-term capital loss and dollar 9,000 short-term capital loss. dollar 4,000 long-term capital loss and dollar 6,000 short-term capital loss. dollar 8,000 ordinary loss and dollar 5,000 short-term capital loss. dollar 8,000 long-term capital loss and dollar 6,000 short-term capital loss. Moving to another question will save this response.

Explanation / Answer

Answer: a. $4000 long term capital loss and $9000 short term capital loss

=> Losses which are taken on over a period of 1 year are long term gain / loss =

Long term losses = Loss on Pink corp. stock = $1000 + Loss u/s 1244 purchased two years ago $8000 = $9000

Long term gain = $5000

Net Long term capital loss = $9000 - $5000 = $4000

Short term capital loss = Loss on non-business bad debts $9000.

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