Determining losses for tax purposes

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Emily Patrick formed Teal Corporation a number of years ago with an investment of $200,000 of cash, for which she received $20,000 in stock and $180,000 in bonds bearing interest of 8% and maturing in 9 years. Several years later, Emily lent the corporation an additional $50,000 on open account. In the current year, Teal Corporation becomes insolvent and is declared bankrupt. During the corporation's existence, Emily was paid an annual salary of $60,000. How should she treat her losses for tax purposes?

Reference no: EM13152027

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