Determine C Corporation Taxable Income Practice Test

There is no deduction available for worthless stock; the loss must be offset against future gains.

If the subsidiary is an affiliated corporation (80% or more owned) and meets the Section 165(g)(3) requirements, the loss is treated as an ordinary loss rather than a capital loss.

The worthless stock deduction is a Section 1231 loss if the stock was held for more than one year.

The worthless stock deduction is always a capital loss regardless of the ownership percentage.