Three years ago at a cost of $40,000, Paul Sanders acquired stock in a corporation that qualified as a small business corporation under 1244. A few months after he acquired the stock, when it was still worth $40,000, he gave it to his brother, Mike Sanders. Mike, who is married and files a joint return, sells the stock for $25,000 in the current tax year. Mike asks you, his tax adviser, how the sale will be treated for tax purposes. a. Complete the letter. Maloney, Young, Nellen, & Persellin, CPAs 5191 Natorp Boulevard Mason, OH 45040 July 24, 2020 Mr. Mike Sanders 10 Hunt Wood Drive Hadley, PA 16130 Dear Mr. Sanders: This letter is in response to your question about stock you held in a corporation that qualified as a small business corporation under 1244. Our conclusion is based on the facts you provided us. Any change in facts may cause our conclusion to be accurate Your brother, Paul, gave you the stock a few months after he purchased it for $40,000 three years ago. You sold the stock this year for $25,000. You may deduct the difference between your basis and the fair market value of the stock. When property is given to another, there is a carryover of basis from the donor to the donee. Consequently, a long-term capital loss results from the sale of the stock. Because you were the original holder of the stock, the special loss deduction on the sale. of $ rules of 1244 apply . These rules would allow you to take a capital