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20 March, 02:23

On September 3, 2019, Willie purchased § 1244 stock in Brass Corporation for $6,000. On December 31, 2019, the stock was worth $8,500. On August 15, 2020, Willie was notified that the stock was worthless. How should Willie report this item on his 2019 and 2020 tax returns?

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  1. 20 March, 02:29
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    Willie should report this item on his 2019 and 2020 tax returns as 2019-$0; 2020-$6,000 long-term capital loss.

    Explanation:

    In year 2020, the loss of $6,000 is classified as a $6,000 long term capital loss because the stock is not § 1244 stock to Willie.

    Therefore, Willie should report this item on his 2019 and 2020 tax returns as 2019-$0; 2020-$6,000 long-term capital loss.
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