Required information

Problem 19-44 (LO 19-2) (Algo)

Skip to question

[The following information applies to the questions displayed below.] This year, Jack O. Lantern incurred a $63,000 loss on the worthlessness of his stock in the Creepy Corporation (CC). The stock, which Jack purchased in 2005, met all of the 1244 stock requirements at the time of issue. In December of this year, Jacks wife, Jill, also incurred a $76,300 loss on the sale of Eerie Corporation (EC) stock that she purchased in July 2005 and that also satisfied all of the 1244 stock requirements at the time of issue. Both corporations are operating companies. Assume that they file a joint return.

Problem 19-44 Part a (Algo)

a. How much of the losses incurred on the two stock sales can Jack and Jill deduct this year, assuming they do not have capital gains in the current or prior years?

	Total deductible loss

b. Assuming they did not engage in any other property transactions this year, how much of a net capital loss will carry over to next year for Jack and Jill?

Capital loss carryover

c. What would be the tax treatment for the losses if Jack and Jill reported only $60,500 of taxable income this year, excluding the securities transactions?

Total loss deductible
Ordinary loss carryover
Capital loss carryover