4-14 Your client, Manny Mendacious, invested $70,000 in the stock of a new start-up company that opened a chain of fried pickle fast-food restaurants called the Cooked Cucumber. As might be expected, this venture has not been very successful, and Mannys stock has lost its value. Manny knows that worthless securities are normally treated as a capital loss, which means the $3,000 annual maximum deduction and other limits apply. While talking to one of his co-investors, he discovers that his tax adviser contends that if a taxpayer abandons security, it is not subject to the capital loss limitation. Manny is very excited about this and is anxious to assert he abandoned the Cooked Cucumber stock and deduct the entire $70,000 loss in the current year.

[There is no question stated here. You are supposed to identify what the issue/question is on your own.]

a. Locate the regulation that deals with this situation and cite it.

b. Review the regulation. Does it raise the need for new information to solve this question?

c. Are you able to reach a conclusion about the research question from this regulation? If so, what is your conclusion?

d. Does the code allow for Manny to treat his loss as ordinary if The Cooked Cucumber stock meets certain requirements?