Question:
On January 12 of the current year, Barney Corporation, a publicly-held corporation, files for bankruptcy. During the bankruptcy proceedings it is determined that creditors will only receive 10% of what they are owed and that the shareholders will receive nothing. Sheryl, a calendar-year taxpayer, purchased 1,000 shares of Barney Corporation common stock for $7,000 on February 22 of the prior year. What tax issues should Sheryl consider?