A Worthless Security Had a Holding Period of 11 Months

question 110

Multiple Choice

A worthless security had a holding period of 11 months when it became worthless on December 10, 2012.The investor who had owned the security had a basis of $10,000 for it.Which of the following statements is correct?

• A)The investor has a long-term capital loss of $10,000.
• B)The investor has a short-term capital loss of $10,000.
• C)The investor has a nondeductible loss of $10,000.
• D)The investor has a short-term capital gain of $10,000.
• E)None of the above.

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Definitions:

Erosion

The gradual loss or decline of an economic or business value over time.

Product Market

The marketplace in which final goods or services are offered to consumers, businesses, and the public sector.

Book Value

The net value of a company's assets, as recorded on the balance sheet, minus liabilities and intangible assets like goodwill.

Source Of Cash

Refers to the origination of funds in a business, which could include operations, financing activities, or investment activities.