Our client Mr$.$ Spock invested $$50,000$ in the stock of a new start$-$up company that opened a chain of restaurants called Star Trek Chicken Roasters. Unfortunately, not everyone appreciated the nostalgic atmosphere of the restaurants, and the venture did not succeed. As a result, Mr$.$ Spock lost his $$50,000$ investment. Mr$.$ Spock knows that worthless securities are normally treated as capital losses for individual income tax purposes, and therefore are subject to a $$3,000$ annual maximum deduction, and other limitations$.$ Mr$.$ Spock visited recently with another investor in the restaurant venture, and that investor told Mr$.$ Spock that his tax advisor told him that if he treats the stock as $$abandoned$,$ the loss will not be subject to the capital loss deductibility limitations$.$ Mr$.$ Spock is excited about this information, and is eager to assert that he $$abandoned$$ the stock and is entitled to deduct the entire $$50,000$ loss in this tax year.

$1.$ Locate the regulation that deals with this situation. Give the regulation$$s citation and when the regulation was finalized.

$2.$ Review the regulation. Locate a relevant Internal Revenue Code section in the regulation. Does the regulation and$/$or the Code section raise a need for additional information to solve this issue?

$3.$ Does the Internal Revenue Code allow for Mr$.$ Spock to treat his loss as ordinary if the Star Trek Chicken Roasters stock meets certain requirements?