W and Y Are Married and File a Joint Return

question 45

Multiple Choice

W and Y are married and file a joint return each year.They owned 50 percent of the stock in a small business corporation with total paid-in capital of $550,000.During the current year, they sold their stock, which had a basis of $275,000, for $190,000.How is this sale treated on their return?

• A)Ordinary deduction of $50,000 and long-term capital loss of $35,000
• B)Ordinary deduction of $85,000
• C)Short-term capital loss of $85,000
• D)Long-term capital loss of $85,000

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