1. This question is designed to develop your ability to find given legislative, administrative, and judicial tax law sources and apply them to a fact situation.

Facts:

Jessa Williams was hired three years ago by the Ricor Corporation (Ricor) to serve as the President and Chief Executive Officer (CEO) for the company. As part of her employment contract, Ricor had agreed to purchase her residence at fair market value in the event the company decided to fire her. Last year, unsatisfied with her performance, Ricor fired her and purchased the residence for $650,000. Ricor immediately listed the house with a real estate agency. Soon after the purchase, the real estate market in the area experienced a serious decline, especially in higher-priced homes. Ricor sold the house this year for $495,000 and paid selling expenses of $15,000, resulting in a realized and recognized loss of $170,000 [$480,000 amount realized ($495,000 - $15,000) - $650,000 adjusted basis].

Required:

Facts:

Jessa Williams was hired three years ago by the Ricor Corporation (Ricor) to serve as the President and Chief Executive Officer (CEO) for the company. As part of her employment contract, Ricor had agreed to purchase her residence at fair market value in the event the company decided to fire her. Last year, unsatisfied with her performance, Ricor fired her and purchased the residence for $650,000. Ricor immediately listed the house with a real estate agency. Soon after the purchase, the real estate market in the area experienced a serious decline, especially in higher-priced homes. Ricor sold the house this year for $495,000 and paid selling expenses of $15,000, resulting in a realized and recognized loss of $170,000 [$480,000 amount realized ($495,000 - $15,000) - $650,000 adjusted basis].