Four years ago Nelson purchased stock in Black Corporation for $37,000. The stock has a current value of $5,000. Nelson needs to decide which of the following alternatives to pursue. Determine the tax effect of each. ü Without selling the stock, Nelson deducts $32,000 for the partial worthlessness of the Black Corporation investment. ü Nelson sells the stock to his aunt for $5,000 and deducts a $32,000 long-term capital loss. ü Nelson sells the stock to a third party and deducts an ordinary loss. ü Nelson sells the stock to his mother for $5,000 and deducts a $32,000 long-term capital loss.
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