What amount of the capital loss may hector deduct

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Problem - Hector is in the 32% tax bracket. He acquired 10,000 shares of stock in Eclipse Corporation three years ago at a cost of $100 per share. In the current year, Hector received a payment of $225,000 from Eclipse Corporation in exchange for 2,000 of his shares in Eclipse. Eclipse has E & P of $975,000. Hector has a capital loss carryover of $50,000 in the current tax year. Assume that Hector has no capital losses and taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%.

What amount of the capital loss may Hector deduct in the current year in the following situations - The $225,000 payment from Eclipse Corporation is a qualifying stock redemption for tax purposes.

Reference no: EM133067665

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