15. Wash Sales. (Obj. 2) An individual taxpayer, not a dealer or trader in secur

Question

15. Wash Sales. (Obj. 2) An individual taxpayer, not a dealer or trader in securities, completed the transactions shown below for Micro Products Company common stock. September 15, 2016, purchased 100 shares at a cost of $4,800 December 10, 2016, sold the above shares for $3,200 January 4, 2017, purchased 60 shares at a cost of $1,800 a. Compute the recognized gain or loss from the December 10 sale and the taxpayer's basis in the stock purchased on January 4. b. Same as in Part a., except that the sales price of the shares sold on December 10 was $5,300. c. Compute the recognized gain or loss from the December 10 sale and the taxpayer's basis in the stock purchased on January 4 assuming that (i) the sales price of the shares sold on December 10 was $3,200 and (ii) the shares of stock sold on December 10 had been inherited by the taxpayer from the taxpayer's father on September 15, 2016. At the time of the father's death, the shares were valued at $2,500. The father had purchased the stock two months earlier for $2,000. No estate tax return was filed.

Explanation / Answer

ans 15 Uner wash sales if an individual sells a security at loss and within thirty days after or before the sale buys a substantially identical stock than the loss is disallowed a) Sale of securities 3200 Purchase price 4800 Loss disallowed as wash sale 1600 Gain or loss recognized is $0 Basis in the stock of Jan 4 is 3400 1800+1600 ans b Sale of securities 5300 Purchase price 4800 Gain 500 Gain recognized is $500 Basis in the stock on January 4 is $1800 ans c Sale of securities 3200 Purchase price 2500 Gain 500 Basis in the stock on January 4 is $1800

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