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Recognized gain or loss of stock investment

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On August 10, 2003, an investor purchased 1,000 shares of Mauve Corporation for $30,000. On January 2, 2004, the stock became worthless. What is the recognized gain or loss and how is it classified?

a. $3,000 STCL.

b. $30,000 STCL.

c. $3,000 LTCL.

d. $30,000 LTCL.

e. None of the above.

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This solution is comprised of a detailed explanation to answer what is the recognized gain or loss and how is it classified.

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b. $30,000 STCL. (ANSWER)

A capital gain is the difference between what you paid for an investment and what you received when you sold that investment. If ...

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