As of December 12 this year, Claudia currently owns 75 shares of EFG Corporation
ID: 2805465 • Letter: A
Question
As of December 12 this year, Claudia currently owns 75 shares of EFG Corporation, a publicly- traded NYSE firm, valued at $42.65 per share. Her original basis in the stock, acquired earlier this year on June 15, is at $51.35 per share. Claudia likes the stock and believes that it will be a profitable long term investment in her portfolio. If she sells the stock on December 15th of this year to claim a loss for year-end income tax planning purposes, when should she plan to repurchase the shares in her portfolio?
January 1 of the following yearExplanation / Answer
Claudia can plan to repurchase the shares in her portfolio on January 1 of the following year because for the tax purpose January 1 to December 31 (calendar year) of the following year is new tax year.
Therefore correct answer is option: January 1 of the following year
If she sells the stock on December 15th of this year valued at $42.65 per share against her original basis in the stock at $51.35 per share to claim a loss for year-end income tax planning purposes; this loss will be considered as capital loss and will be set-off against any capital gain for that year. If the capital losses are more than the capital gains for that year it can be carry forward to the next tax year.
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