Thelma owns some real estate (basis of $120,000 and fair market value of

$65,000) that she would like to sell to her son, Sandy, for $65,000. Thelma is aware, however, that losses on sales between certain related parties are disallowed for Federal income tax purposes [§ 267(a)(1)]. Thelma therefore sells the property to Paul (an unrelated party) for $65,000. The next day Paul sells the property to Sandy for the same amount. Is Thelma’s realized loss of $55,000 deductible? Explain.