Homework: Chapter C:2 Homework Save MyLab Accounti Score: 0 of 1 pt | 6 of 6 (0
ID: 2601655 • Letter: H
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Homework: Chapter C:2 Homework Save MyLab Accounti Score: 0 of 1 pt | 6 of 6 (0 complete) HW Score: 0%, 0 of 6 pt Main Menu Assignments Do Homework Take a Quiz Test PC:2-51 (similar to) Question Help Susan, who is single, transfers property with an $84,000 basis and a $115,000 FMV to Woodside Corporation in exchange for all 250 shares of Woodside stock. The shares qualify as Sec. 1244 stock. Two years later, Susan sells the stock for $33,000 Requirement a. What are the amount and character of Susan's recognized gain or loss? b. How would your answer to Part a change if the FMV of the property were $75,000? Requirement a. What are the amount and character of Susan's recognized gain or loss? Susan's of which $ Choose from any list or enter any number in the input fields and then click Check Answer. part remaining Clear All Check AnswerExplanation / Answer
Answer:- The basis of the stock is $84,000. The basis of the stock for the purposes of section 1244 is only $84,000.
Susan would have a $ 51,000 of loss ($33,000 MVS of stock in two years - $84,000 basis); however Only $ 82,000 ($33,000 MV of stock in two years - $115,000 basis of the stock under section 1244 ) of the loss would be ordinary under section 1244. The remaining $31,000 gain would be a capital gain.
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