A Worthless Security Had a Holding Period of 6 Months

question 76

Multiple Choice

A worthless security had a holding period of 6 months when it became worthless on December 10, 2017. 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:

Variable Substitution

Replacing variables with specific values or expressions within mathematical equations to simplify or solve them.

Exponentiation

A mathematical operation involving two numbers, where one number, the base, is raised to the power of the other, the exponent.

Exponentiation

The operation of raising one number (the base) to the power of another (the exponent), a fundamental mathematical operation.

System of Equations

A set of two or more equations that share two or more unknowns.