Background and Situation: Our clients, Steve and Sherry Perry, have come to the firm with some questions they would like help with. I would like you to research both and write a file memorandum detailing the relevant authority, your analysis, and your conclusions. I would like your draft memorandum by October 14th. Steve and Sherry are long-time clients of the firm, and have scheduled a meeting for early November to talk about some tax issues. They file their tax returns as married, filing jointly. Id like you to compile some background information and provide your thoughts about the following issue before their meeting. Issue: Steve had a successful career in the entertainment industry, and two years ago invested $85,000 in the stock of a start-up company that opened a pie shop called Any Way you Slice It. There were 10 investors, each one invested $85,000 in this small business, which was organized as a C corporation. The pie shop has not been successful, and the company filed for bankruptcy last month. Steves stock is now worthless. Steve knows that worthless securities are normally treated as a capital loss, and he knows that there is an annual limit as to how much he can deduct. Steve was talking to a friend of his, Quentin Pennyroyal, who suggested that instead of declaring a capital loss, Steve should instead declare that he has abandoned his stock in the company. Quentin told Steve that if he abandons the stock, he can deduct the entire amount in 2022 as an ordinary loss. Steve and Sherry thinks this is a great idea, and want to do it. They are coming in to ask us for our opinion and recommendation.