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Determine the tax effect

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Three years ago, Ralph purchased stock in White Corporation for $40,000. The stock has a current value of $5,000. Ralph needs to decide which of the following alternatives to pursue. Determine the tax effect of each.

a) Without selling the stock, Ralph deducts $35,000 for the partial worthlessness of the White Corporation investment.

b) Ralph sells the stock to his mother for $5,000 and deducts a $35,000 long term capital loss.

c) Ralph sells the stock to a third party and deducts a #35,000 long-term capital loss.

d) Ralph sells the stick to his aunt for $5,000 and deducts a $35,000 long-term capital loss.

c) Ralph sells the stock to a third party and deducts an ordinary loss.

Reference no: EM13122632

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