Question

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Harold owns 110 shares of stock in Becker Corporation. His adjusted basis for the stock is $183,000. On December 15, 2018, he sells the stock for $154,000. He purchases 165 shares of Becker Corporation stock on January 12, 2019, for $193,050. a. What are Harold's realized and recognized gain or loss on the sale? b. What is Harold's adjusted basis for the 165 shares purchased on January 12, 2019? c. How would your answers in (a) and (b) change if he purchased only 80 shares for $82,800 in January? (Round any percentage computation to 2 decimal places. Round other computations to the nearest whole dollar value.) (For all requirements, if no gain or loss is recognized, select "No gain/loss".) b. Adjusted basis of shares Adjusted basis of shares

Answer 1

25 a. What are Harold's realized and recognized gain or loss on the sale? Cost Basis Less sale Price of the Common Stock Realized Loss 183000 154000 29000 $0 reognized because of the Wash sale rules. No gain /Loss Realized Loss $0 29000 36 b. What is Harold's adjusted basis for the 165 shares purchased on January 12, 2019? Basis of new Shares Disallowed Loss Adjusted Basis of new Shares 193050 29000 222050 42 c. How would your answers in (a) and (b) change if he purchased only 80 shares for $82,800 in January? Since he only purchases 80 shares, a portion of the loss is recognized; (80/110) = 72.72% * 29000 = 21089 disallowed 7911 allowed basis; (193050+21089) =214139 Recognized Loss Adjusted Basis 21089 214139)