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Angelica incurred a loss in connection with another activity in which she was involved. Five years...

Angelica incurred a loss in connection with another activity in which she was involved. Five years ago, she formed a new corporation with another associate, Bernie Mayday. She and Bernie each contributed $50,000 to the corporation for one-half of it’s stock. Since then the corporation had conducted no activities as it was waiting for the approval of certain patents it held. Angelica discovered in 2020 that, although the corporation had legally been created, and the money was transferred to it, none of the patents had been approved and Bernie had made off with all of its cash, including the $50,000 she contributed. Bernie has left the country and there is no money in the corporate account. Please do the research necessary to determine the proper tax treatment for Angelica of the $50,000 loss. Document your research in a memo.

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ekkarill92 answered 2 years ago
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