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I have another question on here that I asked yesterday that

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says waiting for expert. Can...
I have another question on here that I asked yesterday that says waiting for expert. Can you answer it?
Submitted: 6 years ago.Category: Tax
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8/1/2011
Tax Professional: Lev, Tax Advisor replied 6 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,663
Experience: Taxes, Immigration, Labor Relations
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LEV :

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Customer:

Amount and Character of Loss Transactions. On September 30 of the current year, Silver Fox Corporation files for bankruptcy. At the time, it estimates that the total FMV of its


assets is $725,000, whereas the total amount of its outstanding debt amounts to


$950,000. Silver Fox Corporation has been engaged in the resale of tax preparation and


tax research-related books and software for several years.


a. At the time of the bankruptcy, Silver Fox is owned by Randall, who purchased the


stock from an investor for $250,000 several years ago. Randall is single. What are the


amount and character of the loss sustained by Randall upon Silver Fox’s bankruptcy?


b. How would your answer to part a change if Randall originally organized Silver Fox


Corporation, capitalizing it with $250,000 of cash and assuming Silver Fox qualifies as


a small business corporation?


c. How would your answer to Part a change if Randall were a corporation instead of an


individual?


d. How would your answer to Part b change if Randall were a corporation instead of an


individual?

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,663
Experience: Taxes, Immigration, Labor Relations
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Tax Professional: Jax Tax, Tax Attorney replied 6 years ago
Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1,408
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Verified
A. There is not enough information to answer the question. It depends highly on the type of bankruptcy and the ultimate outcome of creditor negotiations as well as the status of the outstanding debt as far as being secured or unsecured.
B. Same as above other than the fact that he may qualify for Sec 1244 that would allow losses to be categorized as ordinary in excess of the typical $3000 but still with limitations.
C. The answer would likely not change because a corporate owner and individual owner are both legal entities that can own stock.
D. 1244 would be out the window.
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Lev
Lev
Lev, Tax Advisor
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