Detailed Answer
(c) The requirement is to determine the amount of loss
that Rego Corp. can deduct on a sale of its trailer to a 50% shareholder.
Losses are disallowed on transactions between related
taxpayers, including a corporation and a shareholder owning
more than 50% of its stock. Since Al Eng owns only 50% (not
more than 50%), the loss is recognized by Rego. Since the trailer
was held for more than one year and used in Rego’s business, the
$2,000 loss is a Sec. 1231 loss. Answer (d) is incorrect because
Sec. 1245 only applies to gains.