Conner purchased 300 shares of Zinco stock for $30,000 in
2008. On May 23, 2012, Conner sold all the stock to his daughter
Alice for $20,000, its then fair market value. Conner realized
no other gain or loss during 2012. On July 26, 2012, Alice sold
the 300 shares of Zinco for $25,000.
What amount of the loss from the sale of Zinco stock can
Conner deduct in 2012?

(a) The requirement is to determine the amount of the
$10,000 loss that Conner can deduct from the sale of stock to his
daughter, Alice. Losses are disallowed on sales or exchanges of
property between related taxpayers, including members of a family.
For this purpose, the term family includes an individual’s
spouse, brothers, sisters, ancestors, and lineal descendants (e.g.,
children, grandchildren, etc.). Since Conner sold the stock to his
daughter, no loss can be deducted.