In January of last year Debbie single established a corporat

In January of last year, Debbie, single, established a corporation and acquired Section 1244 stock. This year the stock, which had a basis of $120,000, became worthless. Debbie had no other property transactions during the year. How will Debbie\'s adjusted gross income decrease by because of these transactions?

Solution

ANSWER: Debbie\'s adjusted gross income decrease by $50,000 due to these transactions. According to Section 1244 ordinary loss deduction for any tax year cannot be more than $50,000 for a single filer or $100,000 on a joint return