Ed,a Businessperson,is a Friend of Fran,the Owner of a Percolated

question 23

Essay

Ed,a businessperson,is a friend of Fran,the owner of a Percolated Coffee & Baked Goods store. Every day,Ed spends five minutes in Fran's store,looking at the goods and usually buying one or two cinnamon buns or bagels. One afternoon,Ed goes into the store,looks at the items,and picks up a $1 chocolate brownie. Ed waves the brownie at Fran without saying a word and walks out. Is there a con-tract? If so,how would it be classified in terms of formation,perform-ance,and enforceability?

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Definitions:

Wash Sale Rules

IRS regulations that disallow the claim of a loss on the sale of a security if a substantially identical security is purchased within a 30-day period before or after the sale.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Like-Kind Exchange

A tax deferral for the exchange of business or investment properties that are of the same nature or character, without cash being involved.

Gain Recognition

The process by which gains from the sale or exchange of assets are reported for tax purposes.