Bob Morgan was employed by Green Corporation for 20 years. During the course of Bob's employment, he received options to purchase shares of Green Corporation stock that he exercised. He also acquired shares of Green Stock on the open market and through Green's employee stock purchase plan. Unfortunately for Bob, Green filed a Chapter 11 bankruptcy petition. Fraudulent accounting practices by certain Green officers contributed to the company's bankruptcy filing. Green's chief executive officer was convicted of several violations of the securities laws, including fraud, conspiracy, and filing false financial statements with the Securities and Exchange Commission. Two other Green officials pleaded guilty to fraud and conspiracy. The bankruptcy filing and fraudulent accounting practices caused the value of Green's stock to decline significantly. Later, the bankruptcy court confirmed Green's plan of reorganization and Green emerged from bankruptcy with Bob's shares having only a very minimal value. On June 20, 2008, Bob surrendered and relinquished all his rights to the Green Corporation Stock. Evaluate the possibility of Bob claiming a theft loss or claiming a deductible loss for the Green stock as a worthless security.
Utilizing the steps involved in tax research, you will need to research the tax code sections and court cases to determine the answer to the question imposed. Use the Tax File Memorandum, and Client Letter formats.