Question

Hamlet, a calendar year taxpayer, owns 1,000 shares of Vanity Corporation common stock, which he purchased 2 years ago for $4,000. Hamlet sells all his shares on December 29, 2020, for $2,500. On January 23, 2021, he purchases 600 shares of Vanity Corporation common stock. How much loss can Hamlet recognize in 2020

Answer 1

Answer:

Hamlet

Hamlet can recognize a loss of $1,500 in 2020.

Explanation:

a) Data and Calculations:

Number of shares in Vanity Corporation = 1,000 common stock

Period of stockholding = 2 years

Cost of investment = $4,000

Sales proceeds from shares = $2,500

Capital loss = $1,500

b) Hamlet can use the capital loss deduction of $1,500 to reduce his other capital gains of the similar term in the first instance.  Note that the capital loss is a long-term capital loss since the investment was held for two years.