On July 20,2009,Matt (Who Files a Joint Return)purchased 3,000 Shares

question 33

Multiple Choice

On July 20,2009,Matt (who files a joint return) purchased 3,000 shares of Orange Corporation stock (the stock is § 1244 small business stock) for $24,000.On November 10,2010,Matt purchased an additional 1,000 shares of Orange Corporation stock from a friend for $150,000.On September 15,2011,Matt sold the 4,000 shares of stock for $120,000.How should Matt treat the sale of the stock on his 2011 return?

• A) $54,000 ordinary loss.
• B) $100,000 ordinary loss; $46,000 net capital gain.
• C) $100,000 ordinary loss; $20,000 STCL.
• D) $130,000 ordinary loss; $66,000 LTCG.
• E) None of the above.

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Definitions:

Interest Rate

This is the percentage of a loan or deposit amount charged as interest to the borrower or paid to the investor, respectively, typically expressed on an annual basis.

Equivalent

Equivalent refers to something being equal in value, function, or meaning, often used in financial contexts to compare different financial instruments or investments.

Cash Flows

The entirety of funds transferred inwards and outwards of a business, which is vital for maintaining operational liquidity.

Annuities

Financial products sold by financial institutions that are designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time.