Super Clean Corporation runs a chain of dry cleaners. Borax is used heavily in Super Cleans dry cleaning process and has been in short supply several times in the past. Super Clean Corporation bought a controlling interest in Reagan Borax Corporation in 2010. Reagan Borax Corporation is a , a borax mining concern the underlying business model was that with the ownership of a Borax mine, supplies for Super Clean would be uninterrupted in the future. Although the borax must be refined before it is usable for dry cleaning purposes, a well established commodities market exists for trading unrefined borax for refined borax.

After owning the Reagan Borax Corporation stock for four years, Super Clean sold the stock in 2014 at a loss because Reagan Borax Corporation was in difficult financial straits and fixing the liquidity issue was beyond Super Clean's financial capabilities. Also, Super Clean no longer needs to own Reagan Borax Corporation because it has obtained an alternative source of borax.

What is the nature of Super Clean Corporation 's loss on the disposition of the Reagan Borax Corporation stock? The purpose of this question is explain to your colleagues when a business transaction could or would result in an ordinary and deductible loss as opposed to a capital loss from the sale of an asset.

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