Emily Patrick (36 Paradise Road, Northampton, MA 01060) formed Teal Corpo ration 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 nine 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.
Write a letter to Emily in which you explain how she should treat her losses for tax purposes.