Locate the regulation that deals with the given situation

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Assignment

Your client, Manny Mendacious, invested $70,000 in the stock of a new start-up company that opened a chain of fried pickle fast-food restaurants call "the Cooked Cucumber." As might be expected, this venture has not been very successful, and Manny's stock has lost its value. Manny knows that worthless securities are normally treated as a short-term capital loss (STCL), which means the $3,000 annual maximum deduction and other limits apply. While talking to one of his co-investors he discovers that her tax advisor (shamus Sham, the taxman) contends that if a taxpayer "abandons" a security it is not subject to the STCL treatment. Manny is very excited about this and is anxious to assert he "abandoned" the Cooked Cucumber stock and deduct the entire $70,000 loss in the current year.

A. Locate the regulation that deals with this situation. Give the regulation's citation and when the regulation was finalized.

B. Review the regulation. Does it raise a need for new information to solve this question?

C. Are you able to reach a conclusion about the research question from this regulation? If so, what is your conclusion(s)?

Reference no: EM131794395

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