Martha, a cash basis and calendar year taxpayer, is

nearing the end of a year she would like to forget.

Several years ago she loaned $$25,000$ to her friend

Janice to enable her to start a business. Janice had

made scheduled payments of $$7,000($ $$1,000$ of this was

interest$)$ when she unexpectedly died in January. At the

time of her death, Janice was insolvent. Martha's

attempts to collect on the debt were fruitless.

On October $1,2022,$ Martha invested $$50,000$ in the

stock of a pharmaceutical company that previously

had been profitable. However, as a result of losing a

patent infringement suit, the company declared

bankruptcy on May $31,2023.$ The bankruptcy trustee

has informed shareholders that they should not expect

to receive anything from the company.

Martha has owned and operated a bookstore as a sole

proprietorship for the past $10$ years. The bookstore

previously produced annual profits of about $$75,000$

Due to the continued growth of online vendors and e$-$

books, Martha's bookstore sustained a net loss of

$$180,000$ this year.

On September $28,2023,$ a hurricane caused a large oak

tree to blow over onto Martha's house. In the

aftermath of the hurricane, Martha's county was

designated a Federal disaster area by the President.

The cost of removing the tree and making repairs was

$$32,000.$ Martha received a check for $$25,000$ from her

insurance company in final settlement of the claim.

Her adjusted basis for the house was $$280,000.$

On March $8,2022,$ Martha purchased what she

believed to be "small business stock" $(1244$ stock$)$

from her friend Peter for $$20,000.$ The stock's value

began to decline significantly soon after its purchase.

On November $2,2023,$ Martha sold the stock for

$$12,000.$

Can you help relieve Martha's feeling of despair by

making her aware of beneficial loss provisions in the

tax law?