In March 2011, Jim Jorges Formed a Small Business Corporation

question 57

True/False

In March 2011, Jim Jorges formed a small business corporation and issued Section 1244 small business stock. In November 2012, the company went bankrupt and Jim incurred a $75,000 loss for amounts invested in the common stock of the small business corporation. If Jim files a joint return, he should report a $50,000 ordinary loss and a $25,000 long-term capital loss.

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Definitions:

Operating Expenses

Ongoing expenses for operating a business, excluding the cost of goods sold but including costs like rent, utilities, and payroll.

Budgetary Slack

The practice of underestimating revenues or overestimating costs when preparing a budget, to create a buffer that makes budget targets easier to achieve.

Revenue Projection

An estimate of the future sales and income generated by a company during a specific period, often used in budgeting and planning.

Quarterly Production Budget

A financial plan that outlines the expected production costs and output levels for a business over a three-month period.