Problem
• Buddy transfers property, with a basis of $10,000 and a fair market value of $5,000 to a corporation in exchange for shares of §1244 stock. If this stock is later sold for $3,000, what is the amount of the ordinary loss on this sale?
• All of the following are factors taken into account in classifying debt versus equity, under §385, except for
o The source of payments.
o The debtor's failure to repay on time or seek postponement.
o Whether the debt is convertible into stock.
o All of these are considered.
o None of these are considered.