Simmon is ready to retire to his rocking chair, so he says to you: “I own 500 shares of stock in Castro, INC. and I’m ready to cash out. So I’ll sell it to you for the very same $25,000 I paid for it back in 2012. And, by the way, you’ll be happy to know that it’s qualified small business stock, so you’re completely protected on the downside – if the company went under, you would get 100% tax cushion for the loss! What do you say...???” On its face, what’s wrong with this offer, and why?

Answer rating: 100% (QA)

Since the stock will be purchased from a shareholder and not the compan... View the full answer