Fox corp., an s corporation, had an ordinary loss of $36,500 for the year ended december 31, year 2. at january 1, year 2, duffy owned 50% of fox's stock. duffy held the stock for 40 days in year 2 before selling the entire 50% interest to an unrelated third party. duffy's basis for the stock was $10,000. duffy was a full-time employee of fox until the stock was sold. duffy’s share of fox’s loss was
a) $0b) $2,000c) $10,000d) $18,250

b. $2000

Explanation:

The rule for charging loss and/or recognizing profit during a change in ownership interest within the taxable year is that 'the loss and/or gain is allocated on a daily basis'.

Assuming a 365 day year, the daily loss would be as follows;

Loss per day: $36500÷365 = $100 per day

Now in this question Duffy only held the stock for 40 days so the allocation of ordinary loss would be on a daily basis. The loss bore by both Fox Corp. and Duffy during 40 days would be as follows;

Loss of 40 days: $100×40=$4000

Duffy owned only 50% of Fox's stock therefore the loss will also be allocated based on his ownership.

Duffy's share of fox's loss = $4000×50%

Duffy's share of fox's loss = $2000

you can lose ranking 2 ways.

1) you don't have enough points due to you expending them by asking questions/your answers are deleted.

2) your brainliest's expired. this means that brainliests, once they exceed the 30 day limit, expires. this is to ensure that you continue to contribute into the community at a constant rank if you want to continue to have/exceed the rank you have right now.

if you go to profile, and click "show more information" located on the bottom left of the box with your information (on top of the questions answered, questions asked, and friends), you will be given the following information (example):

member since : 02/13/2017, 18: 11

questions answered: 9741

questions asked: 162

no. of brainliest answers: 1575

brainliest answers in last 30 days: 10

warnings: 0 view

questions/answers reported: 2637

questions/answers incorrectly reported: 64

look at the "brainliest answers in the last 30 days". this is the one that will affect your rank other than your points. again, once your brainliest expires (was earned 31+ days ago), it will not be counted.

~

the answer is true

for e2020 ; -;