Bennett, Who Is Single, Owns All of the Outstanding Stock

question 112

Multiple Choice

Bennett, who is single, owns all of the outstanding stock of Bennett Company. In 2018 Bennett sells all of his stock in the company for $30,000. If the stock qualifies as Section 1244 and his basis in the stock is $140,000, how is his loss on the sale classified for tax purposes?

• A) $110,000 capital loss
• B) $110,000 ordinary loss
• C) $60,000 capital loss; $50,000 ordinary loss
• D) $100,000 ordinary loss; $10,000 capital loss
• E) None of the above

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Definitions:

Self-efficacy

An individual's belief in their own ability to succeed in specific situations or accomplish a task, which plays a significant role in how goals, tasks, and challenges are approached.

Confidence

The belief in oneself and one's ability to succeed, influencing how challenges and opportunities are approached.

Observational Learning

A form of learning that occurs through watching the behaviors of others and the outcomes of those behaviors.

Reinforcing Factors

Elements or conditions that support the continuation or strengthening of behavior through positive or negative reinforcement.