No deduction is allowed with respect to any loss from the sale or exchange of property,directly or indirectly,between related parties.

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According to the Internal Revenue Code section 267, no deduction is allowed for any loss from the sale or exchange of property between related parties. This rule is designed to prevent taxpayers from claiming artificial losses by transferring property to a related party at a low value and then claiming a loss when the property is sold later at a higher value.

No Deduction Is Allowed with Respect to Any Loss from the Sale