In 2001,Donna transferred assets (basis of $300,000 and fair market value of $250,000)to Egret Corporation in return for 200 shares of § 1244 stock. Due to § 351,the transfer was nontaxable; therefore,Donna's basis in the Egret stock is $300,000. In 2002,Donna sells 100 of these shares to Walter (a family friend)for $100,000. In 2008,Egret Corporation files for bankruptcy,and its stock becomes worthless.
a.How much loss may Donna recognize in 2002 and 2008? What is the nature of this loss? [Note: Donna is married and always files a joint return.]
b.How much loss may Walter (a single taxpayer) recognize in 2008, and what is the nature of such loss?

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The Answer of In 2001,Donna transferred assets (basis of $300,000 and fair market value of $250,000)to Egret Corporation in return for 200 shares of § 1244 stock. Due to § 351,the transfer was nontaxable; therefore,Donna's basis in the Egret stock is $300,000. In 2002,Donna sells 100 of these shares to Walter (a family friend)for $100,000. In 2008,Egret Corporation files for bankruptcy,and its stock becomes worthless.
a.How much loss may Donna recognize in 2002 and 2008? What is the nature of this loss? [Note: Donna is married and always files a joint return.]
b.How much loss may Walter (a single taxpayer) recognize in 2008, and what is the nature of such loss?

In 2001,Donna Transferred Assets (Basis of $300,000 and Fair Market