On September 30 of the current year, Fox Corporation files for bankruptcy. At the time, it estimates

Question:

On September 30 of the current year, Fox files for bankruptcy. At the time, it estimates that the total FMV of its assets is $725,000, whereas the total amount of its outstanding debt amounts to $950,000. Fox has been engaged in the resale of tax preparation and tax research-related books and software for several years.
a. At the time of the bankruptcy, Fox is owned by Randall, who purchased the stock from an investor for $250,000 several years ago. Randall is single. What are the amount and character of the loss sustained by Randall upon Fox’s bankruptcy?
b. How would your answer to part a change if Randall originally organized Fox capitalizing it with $250,000 of cash and assuming Fox qualifies as a small business How would your answer to Part a change if Randall were a instead of an individual?
d. How would your answer to Part b change if Randall were a instead of an individual?
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...