Character of loss. The Michigan Corporation owns 20% of the Wolverine Corporatio
ID: 2379378 • Letter: C
Question
Character of loss.
The Michigan Corporation owns 20% of the Wolverine Corporation. The Wolverine stock was acquired eight years ago to ensure a steady supply of raw materials. Michigan also owns 30% of Spartan Corporation and 85% of Huron Corporation. Stock in both corporations was acquired more than ten years ago for investment purposes. During the current year, Wolverine, Spartan, and Huron are deemed bankrupt, and the stocks are considered worthless. Decribe how Michigan should treat its losses.
Explanation / Answer
Michigan should amortised all its losses over the years.It should be treated as capital losses..The 20% of wolverine corporation ,30% of Spartan corporation and 85% of Huron corporation should be amortised equally overs years as capital lossess.