Jack Has a Basis of $36,000 in His 1,000 Shares

question 14

Essay

Jack has a basis of $36,000 in his 1,000 shares of Acorn Corporation stock (a capital asset). The stock was acquired three years ago. He receives the following distributions as part of a plan of liquidation of Acorn Corporation:
$\begin{array}{ll}\text { Date}&\text { Amount}\\\text { March } 31 \text { of } 2009 & \$ 10,000 \\\text { July } 15 \text { of } 2009 & 10,000 \\\text { November } 15 \text { of } 2010 & 10,000 \\\text { January } 15 \text { of } 2010 & 10,000\end{array}$
What are the amount and character of the gain or loss that Jack will recognize during 2009? During 2010?

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Definitions:

Bailor

The person who transfers personal property under a contract of bailment.

Borne

Carried or transported by the thing specified; often used to indicate who bears the responsibility for paying costs or charges.

Chattel

Personal property that can be moved from one place to another, such as furniture or vehicles.

Intangible Personal Property

Property that does not have a physical presence but holds value, such as patents, copyrights, trademarks, and financial assets.