Green Corporation, a manufacturing company, hired several executives during 2020. The executives had homes in other cities when they were hired by Green. If the executives were unable to sell those homes, they would be unable to buy replacement homes in Greens area. Consequently, if the executives were unable to sell their homes within 30 days of listing them for sale, Green bought the homes from the executives for 10% less than the list price. Green immediately put the homes purchased up for resale. Each home Green purchased was ultimately sold at a loss. By the end of 2020, Green did not own any homes, but had suffered losses totaling $125,000 on the sale of houses. Green is uncertain how to report the sale of the homes. Green has a $32,000 short-term capital gain from stock investment transactions during 2020.

Would Green Corporation prefer the $125,000 loss from the sale of the houses to be treated as ordinary or capital? Why?

What is the proper treatment of the $125,000 loss (ordinary or capital)? Provide an explanation of your answer that is sufficiently supported by tax authorities that are properly cited.

Green Corporation has asked you how it might structure future transactions involving transferred executives and their residences to achieve better tax results. Provide an explanation of your answer that is sufficiently supported by tax authorities that are properly cited.