Question

Ms. Fresh bought 1,000 shares of Ibis Corporation stock for $5,100 on January 15, 2018. On December 31, 2020, she sold all 1,000 shares of her Ibis stock for $4,550. Based on a hot tip from her friend, she bought 1,000 shares of Ibis stock on January 23, 2021, for $3,025. What is Ms. Fresh's recognized loss on her 2020 sale, and what is her basis in her 1,000 shares purchased in 2021?a. $0 LTCL and $4,850 basis.b. $560 LTCL and $4,290 basis.c. $840 LTCL and $4,010 basis.d. $1,120 LTCL and $3,730 basis.e. $1,400 LTCL and $3,450 basis.

Answer 1

Answer:

LTCL = $0

Basis = $3,575

Explanation:

January 15, 2018, buy 1,000 shares at $5,100

December 31, 2020, sold 1,000 shares at $4,550

If Ms. Fresh hadn't repurchased the stock in January, she could have reported a long term capital loss of $550. But since she repurchased the 1,000 shares just after selling them, it is considered a wash sale.

So no long term capital loss will be recognized and the basis of the 1,000 stocks = $3,025 + $550 = $3,575