X [C's section 1244 loss] | = | $1,000,000 [$1,000,000 -0 = $1,000,000] |
$100,000 [C's total loss] | $2,000,000 [total amount received by Corporation Z] | |
X = $50,000 |
The remaining $50,000 is not treated as an ordinary loss under section 1244.
26 C.F.R. §1.1244(c)-2