In 2005, Donna transferred assets (basis of $300,000 and fair market value of $250,000) to Egret Corporation

Question:

In 2005, Donna transferred assets (basis of $300,000 and fair market value of $250,000) to Egret 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 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?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...