57. LO.5 Dennis sells short 100 shares of ARC stock at $20 per share on January

Question

57. LO.5 Dennis sells short 100 shares of ARC stock at $20 per share on January 15, 2015. He buys 200 shares of ARC stock on April 1, 2015, at $25 per share. On May 2, 2015, he closes the short sale by delivering 100 of the shares purchased on April 1. a. What are the amount and nature of Dennis’s loss upon closing the short sale? b. When does the holding period for the remaining 100 shares begin? c. If Dennis sells (at $27 per share) the remaining 100 shares on January 20, 2016, what will be the nature of his gain or loss?

Explanation / Answer

57. LO.5 Dennis sells short 100 shares of ARC stock at $20 per share on January

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