What is the nature of such loss

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In 2005, 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 2006, Donna sells 100 of these shares to Walter (a family friend) for $100,000. In 2012, Egret Corporation files for bankruptcy, and its stock becomes worthless.

a. How much loss may Donna recognize in 2006 and 2012? What is the nature of this loss? 

b. How much loss may Walter (a single taxpayer) recognize in 2012, and what is the nature of such loss?

Reference no: EM13971115

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