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

question 35

Multiple Choice

Bennett, who is single, owns all of the outstanding stock of Bennett Company.In 2019 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:

Government Purchases

Expenditures by government bodies on goods and services that directly contribute to a nation's aggregate demand.

Social Security Payments

Government transfers paid to eligible individuals, such as the retired, disabled, and survivors, aimed at providing a basic level of financial security.

Private Pensions

Retirement plans offered by private sector employers, unions, or other organizations to provide income to employees after retiring.

GDP

Gross Domestic Product represents the sum value of all products and services generated within a country's boundaries during a certain timeframe.