A Worthless Security Had a Holding Period of 6 Months

question 96

Multiple Choice

A worthless security had a holding period of 6 months when it became worthless on December 10, 2018. The investor who had owned the security had a basis of $20,000 for it. Which of the following statements is correct?

• A) The investor has a long-term capital loss of $20,000.
• B) The investor has a short-term capital loss of $20,000.
• C) The investor has a nondeductible loss of $20,000.
• D) The investor has a short-term capital gain of $20,000.
• E) None of the above.

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Definitions:

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Individuals or entities that stubbornly refuse to pay debts they owe, despite legal obligations to do so.

Insider

An individual who possesses confidential information about a company, typically due to their position within the company.