LO.2 Paul Sanders, a married taxpayer who files a joint return with his wife, acquired stock in a corporation that qualified as a small business corporation under § 1244. The stock cost

$30,000 and was acquired three years ago. A fewmonths after he acquired the stock he gave it to his brother, Mike Sanders. The stock was worth $30,000 on the date of the gift. Mike, who is married and files a joint return with his wife, sells the stock for $10,000 in the current tax year. You represent Mike who asks you whether he can take a loss deduction on the sale of the stock. If so, how will the loss be treated for tax purposes? Prepare a letter to your client and a memo to the files.Mike’s address is 2600 Riverview Drive, Plank,MO63701.