$39$ Section $1244$ Losses. During the current year, Karen sells her entire interest in Central

Corporation common stock for $$22,000.$ She is the sole shareholder, and originally

organized the corporation several 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 the manufacture of items that protect personal computers from static

electricity. Unfortunately, this market is extremely competitive, and Central Corporation

incurs substantial losses throughout its existence.

a$.$ Assuming Karen is single, what are the amount and the character of the loss recog$-$nized on the sale of the Central Corporation stock?

b$.$ Assuming Karen is married and files a joint return, what are the amount and the char$-$acter of the loss recognized on the sale of the Central Corporation stock?

c$.$ How would your answer to Part a change if Karen had originally purchased the stock

from another shareholder rather than organizing the corporation?

d$.$ How might Karen have structured the transaction in Part a to receive a greater tax

advantage