Todd Zimler, who files a joint income tax return with his wife, Stella, owns 85 per-cent of the outstanding stock of Zimler Manufacturing. In January of last year, Todd transferred a tract of investment land to the corporation in exchange for 600 shares of nonvoting preferred stock, which qualified as Section 1244 stock. At date of transfer, Todd’s basis in the land was $185,000, and the land’s FMV was $60,000. The exchange of land for stock was nontaxable under Section 351. Consequently, Todd recognized no loss and took a $185,000 substituted basis in the 100 shares of stock. In May of this year, Todd sold the 100 shares to an unrelated investor for $62,000. What is the character of Todd’s $123,000 recognized loss?