Question

Ms. Fresh bought 1,000 shares of Ibis Corporation stock for $6,700 on January 15, 2016. On December 31, 2018 she sold all 1,000 shares of her Ibis stock for $5,350. Based on a hot tip from her friend, she bought 1,000 shares of Ibis stock on January 23, 2019 for $3,425. What is Ms. Fresh's recognized loss on her 2018 sale and what is her basis in her 1,000 shares purchased in 2019?

Answer 1

Answer:

her basis in her 1,000 shares purchased in 2019 = $4,775

Explanation:

Data provided in the question:

Number of shares bought = 1,000

Value of  Ibis Corporation stock = $6,700

Selling value of  Ibis Corporation stock on December 31, 2018 = $5,350

Buying price of shares on January 23, 2019 = $3,425

Now,

Since shares are bought back within 30 days from the previously purchase shares sold ,

therefore,

the loss will not be considered

But this will increase the Adjusted basis for new shares purchase

Thus,

Realized loss = Sales value - Purchase value  

= $5,350 - $6,700

= - $1350

Here,

the negative sign depicts the loss

LTCL = $0

Adjusted basis for new 1000 shares

= Buying price of shares on January 23, 2019 + Realized loss

= $3,425 + $1,350

= $4,775