In addition to being an employee of Rock Hard Roofing Material, Lou owns 10 percent of the company’s common stock. Rock Hard falls on hard times in 2019. To forestall bankruptcy, Rock Hard’s employees and shareholders lend the company $1,000,000. Lou’s share of the total loan is $50,000—$25,000 related to her position as an employee and $25,000 related to her ownership of stock. In early 2020, creditors force Rock Hard into bankruptcy. Lou loses her entire $50,000. 

a. Is Lou’s loss related to a trade or business or an investment?

b. Can Lou deduct her loss as a bad debt expense?