During the current year Kelly sells her entire interest in C

During the current year, Kelly sells her entire interest in Cunningham Corporation common stock for $23,000. She is the sole shareholder, and originally organized the corporati several years ago by contributing $88,000 in exchange for her stock, which qualifies as Sec. 1244 stock. Since its incorporation, Cunningham has been involved in the manufacture of items that protect personal computers from static electricity. Unfortunately, this market is extremely competitive, and Cunningham Corporation incurs substantial losses throughout its existence Read the requirements Requirement a. Assuming Kelly is single, what are the amount and the character of the loss recognized on the sale of the Cunningham Corporation stock? (Complete all answer boxes. Enter a \"O\" for any zero balances.) long-term capital loss and a $ Assuming Kelly is single, she will recognize a ordinary loss on her return from the sale of the Cunningham Corporation stock. Requirement b. Assuming Kelly is married and files a joint return, what are the amount and the character of the loss recognized on the sale of the Cunningham Corporation stock? (Complete all answer boxes. Enter a \"O\" for any zero balances.) Assuming Kelly is married and files a joint return, she will recognize a long-term capital loss and a ordinary loss on her return from the sale of the Cunningham Corporation stock. Requirement c. How would your answer to Part a change if Kelly had originally purchased the stock from another shareholder rather than organizing the corporation? Complete all answer boxes. Enter a \"O\" for any zero balances.) If Kelly had originally purchased the stock from another shareholder rather than organizing the corporation, the stock would qualify as Sec. 1244 stock. Under this revised fact pattern, the sale of stock would result in a long-term capital loss and a S ordinary loss

Solution

The amount realized $23,000 Less; Basis 88000 Loss recognized ($65,000) Ans 1 Since Kelly is single she can claim maximum ordinary loss of $50000 she cannot claim the remaining $15000 loss She will recognize $0 long term capital loss $50000 ordinary losses ans 2 As they file joint return so maximum loss that can be claimed is $100000 She will recognize $0 long term capital loss $65000 ordinary losses ans 3 The stock would not $65000 of long term capital loss and $0 of ordinary loss If any doubt please comment