Three years ago, Ralph purchased stock in White Corporation for $40,000. The stock has a current value of $5,000. Ralph needs to decide which of the following alternatives to pursue. Determine the tax effect of each.
a.- Without selling the stock, Ralph deducts $35,000 for the partial worthlessness of the White Corporation investment.
b. Ralph sells the stock to his mother for $5,000 and deducts a $35,000 long term capital loss.
c. Ralph sells the stock to a third party and deducts a #35,000 long-term capital loss.
d. Ralph sells the stick to his aunt for $5,000 and deducts a $35,000 long-term capital loss.
c. Ralph sells the stock to a third party and deducts an ordinary loss.