On January 10, 2007, RedCorporation purchased stock in Orange Corporation (the s
ID: 2458111 • Letter: O
Question
On January 10, 2007, RedCorporation purchased stock in Orange Corporation (the stock is§ 1244 small business stock) for $140,000. OnOctober 15, 2007, Red sold the stock for $20,000. How shouldRed treat the loss on the sale of the stock?
$120,000 ordinary loss.
$20,000 short-term capital loss;$100,000 ordinary loss.
$20,000 long-term capital loss;$100,000 ordinary loss.
$50,000 ordinary loss and $70,000long-term capital loss.
Which of the following events wouldproduce a deductible loss?
Erosion of personal use land due torain or wind.
Termite infestation of a personalresidence over a several year period.
Damages to personal automobileresulting from a taxpayer’s willful negligence.
A stolen diamond ring.
None of the above.
Swan Corporation incurred thefollowing expenditures in connection with the development of a newproduct:
Salaries
$ 40,000
Materials
8,000
Advertising
3,000
Market survey
2,000
If Swan Corporation elects toexpense research and experimental expenditures, determine theamount of the deduction for research and experimentalexpenditures.
$40,000.
$48,000.
$50,000.
$51,000.
$53,000.
Cost recovery is allowed on naturalresources.
$120,000 ordinary loss.
Explanation / Answer
Question 3 $ 48,000 Salaries and materials are research and experimental expenditure indeveloping a new product.