Tammy, who is single, purchased 1,000 shares of qualified small business stock in Startup, Inc., in 2014. She had paid $40,000 for the stock by way of making a capital contribution to Startup, which issued the stock directly to her in exchange. There have been no subsequent adjustments to her original cost basis in the stock and she hasn’t purchased any additional shares.   What amount and character of gain or loss, if any, would Tammy recognize if she sold all 1,000 shares today for $75,000? Why?   What amount and character of gain or loss, if any, would Tammy recognize if she sold all 1,000 shares today for $25,000? Why?

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
Publisher:Maloney
Chapter7: Deductions And Losses: Certain Business Expenses And Losses
Section: Chapter Questions
Problem 21CE
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Tammy, who is single, purchased 1,000 shares of qualified small business stock in Startup, Inc., in 2014. She had paid $40,000 for the stock by way of making a capital contribution to Startup, which issued the stock directly to her in exchange. There have been no subsequent adjustments to her original cost basis in the stock and she hasn’t purchased any additional shares.

 

  1. What amount and character of gain or loss, if any, would Tammy recognize if she sold all 1,000 shares today for $75,000? Why?

 

  1. What amount and character of gain or loss, if any, would Tammy recognize if she sold all 1,000 shares today for $25,000? Why?

 

 

 

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