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Part $1$

Vicki$,$ who is$$ single, transfers property with an $ $85$ comma $000$ basis and a $ $128$ comma $000$ fair market value$($FMV$)$ to Tasty World Corporation in exchange for all $50$ shares of Tasty World stock. The shares qualify as Sec. $1244$ stock. Two years$$ later, Vicki sells the stock for $ $28$ comma $000.$

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Part $1$

Requirement a$.$ What are the amount and character of Vicki$\text{'}$s recognized gain or$$ loss?

Vicki's

loss

is

$$57,000$

$,$ of which

$$50,000$

is

ordinary under Sec. $1244$ and any remaining loss is a long term capital loss.

Part $2$

Requirement b$.$ How would your answer to Part a change if the FMV of the property were $ $74$ comma $000?$

Vicki's

loss

is

$$57,000$

$,$ of which

$$46,000$

is

ordinary under Sec. $1244$ and any remaining loss is a long term capital loss.