Claude Bergeron Sold 1,000 Shares of Ditta, Inc

question 65

Multiple Choice

Claude Bergeron sold 1,000 shares of Ditta, Inc., an S corporation, for $12,000. He had owned the stock for three years and had a stock basis of $111,000 in the shares. Claude is single, and he is the original owner of the § 1244 stock shares. Calculate the appropriate tax treatment.

• A) No gain or loss.
• B) $50,000 LTCL? $49,000 ordinary deduction.
• C) $50,000 ordinary deduction? $49,000 LTCL.
• D) $99,000 long-term capital loss.

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Definitions:

Posting

The process of transferring financial information from the journal to the respective accounts in the ledger, a crucial step in the accounting cycle.

Cash Account

A financial account that records cash transactions in and out.

Posting Reference

A code or number used in accounting to indicate the ledger account to which a transaction has been posted.

Journal Entry

A record in the books of accounts that documents a financial transaction, showing the accounts and amounts debited and credited.