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Lynn transfers property (basis of $225,000 and fair market value of $300,000) to Condor Corporation in...

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Finance

Lynn transfers property (basis of $225,000 and fair market valueof $300,000) to Condor Corporation in exchange for § 1244 stock.The transfer qualifies as a nontaxable exchange under § 351. In thecurrent year, Lynn sells the Condor stock for $100,000. Assume Lynnfiles a joint return with her husband, Ricky. With respect to thesale, Lynn has:

a. A capital loss of $125,000. b. An ordinary loss of $100,000and a capital loss of $100,000. c. An ordinary loss of $125,000. d.An ordinary loss of $100,000 and a capital loss of $25,000. e. Noneof these choices are correct.

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A capital loss is the loss incurred when a capital asset such as an investment decreases in value While ordinary loss is the loss arising out of normal business expense    See Answer
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