How will the loss be treated for tax purposes

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Problem - Critical Thinking Sam Upchurch, a single taxpayer, acquired stock in Hummer Corporation that qualified as a small business corporation under § 1244 at a cost of $100,000 three years ago. He sells the stock for $10,000 in the current tax year.

Required -

a. How will the loss be treated for tax purposes?

b. Assume instead that Sam sold the stock to his sister, Kara Upchurch, a few months after it was acquired for $100,000 (its fair market value). If Kara sells the Hummer stock for $60,000 in the current year, how should she treat the loss for tax purposes?

c. Enter the results of this transacton to Kara on Form 1040, Schedule D (p. 1) (use the most current form available). Her Social Security number is 123-45-6789. Assume that relevant facts from the transaction initially had been shown on Form 8949 with Box F checked.

Reference no: EM132661841

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