On July 20,2011,Matt (Who Files a Joint Return)purchased 3,000 Shares

question 107

Multiple Choice

On July 20,2011,Matt (who files a joint return) purchased 3,000 shares of Orange Corporation stock (the stock is § 1244 small business stock) for $24,000.On November 10,2012,Matt purchased an additional 1,000 shares of Orange Corporation stock from a friend for $150,000.On September 15,2013,Matt sold the 4,000 shares of stock for $120,000.How should Matt treat the sale of the stock on his 2013 return?

• A)$54,000 ordinary loss.
• B)$100,000 ordinary loss; $46,000 net capital gain.
• C)$100,000 ordinary loss; $20,000 STCL.
• D)$130,000 ordinary loss; $66,000 LTCG.
• E)None of the above.

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Definitions:

Common Stock

Corporate stock that does not convey any preferences to its holders.

Corporation

A legal entity formed by issuing stock to investors, who are the owners of the corporation.

Preferences

Preferences typically involve decisions or policies that give priority or advantage to particular individuals or groups, often seen in legal contexts such as bankruptcy.

Corporate Veil

A legal concept separating the actions of a corporation from its shareholders, protecting them from being personally liable for the company's debts and obligations.