Question

Christina, who is single, purchased 400 shares of Apple Inc. stock several years ago for $18,800. During her year-end tax planning, she decided to sell 200 shares of Apple for $8,400 on December 30. However, two weeks later, Apple introduced its latest iPhone, and she decided that she should buy the 200 shares (cost of $8,800) of Apple back before prices skyrocket. (Leave no answers blank. Enter zero if applicable.) a. What is Christina's deductible loss on the sale of 200 shares? What is her basis in the 200 new shares? b. Assume the same facts, except that Christina repurchased only 100 shares for $4,400. What is Christina's deductible loss on the sale of 200 shares? What is her basis in the 100 new shares?

Answer 1

Solution :

a: Christina's deductible loss is = Sale price per share is $42 ($8400/200) - Purchase price per share is $47 ($18800/400) . Deductible loss = ($42-$47) * 200 = $1000 loss is deductible. Her basis of 200 shares is $ 9800 (Purchase price $8800 plus Deductible loss $1000)

b: If Christina repurchased 100 shares for $4400, then the deductible loss = Sale price per share is $42 ($8400/200) - Purchase price per share is $47 ($18800/400) . Deductible loss = ($42-$47) * 100 = $500 loss is deductible. Her basis of 100 shares is $ 4900 (Purchase price $4400 plus Deductible loss $500)