During the present year karen sells her entire interest in

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During the present year, Karen sells her entire interest in Central company common stock for $22,000. She is the sole shareholder, and initially organized the corporation quite a few years ago by contributing $89,000 in exchange for her stock, which qualifies as Sec. 1244 stock. Since its incorporation, Central has been involved in manufacture of items that protect personal computers from static electricity. Unfortunately, this market is very competitive, and Central Corporation incurs substantial losses throughout its existence.**

a. Consider Karen is single, what are the amount and character of the loss predictable on the sale of the Central Corporation stock?**

b. Consider Karen is married and files a joint return, what are the amount and the character of the loss recognized on sale of the Central Corporation stock?**

c. How would your answer to Part a change if Karen had initially purchased the stock from another shareholder rather than organizing corporation?**

d. How might Karen have structured transaction in Part a to get a greater tax advantage?* 

Reference no: EM13370530

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