On February 20, 2016, Bill Purchased Stock in Pink Corporation

question 70

Multiple Choice

On February 20, 2016, Bill purchased stock in Pink Corporation (the stock is not small business stock) for $1,000. On May 1, 2017, the stock became worthless. During 2017, Bill also had an $8,000 loss on § 1244 small business stock purchased two years ago, a $9,000 loss on a nonbusiness bad debt, and a $5,000 long-term capital gain. How should Bill treat these items on his 2017 tax return?

• A)$4,000 long-term capital loss and $9,000 short-term capital loss.
• B)$4,000 long-term capital loss and $3,000 short-term capital loss.
• C)$8,000 ordinary loss and $3,000 short-term capital loss.
• D)$8,000 ordinary loss and $5,000 short-term capital loss.
• E)$8,000 long-term capital loss and $6,000 short-term capital loss.

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Definitions:

Marginal Cost

Marginal Cost is the cost incurred by producing one additional unit of a product or service.

Labor Costs

Expenses associated with employing labor, including wages, salaries, benefits, and taxes.

Average Total Cost

The total cost of production divided by the total output or quantity produced.

Average Variable Cost

Calculated by dividing the total variable costs by the quantity of output produced; it shows the variable cost per unit of output.