need help with this question. It concerns 2015 Federal income Tax. In January. L
ID: 2483621 • Letter: N
Question
need help with this question. It concerns 2015 Federal income Tax.
In January. Lance sold stock with a cost basis of dollar 26,000 to his brother, James. For dollar 24,000. The fair market value of the stock on the date of sale. Five months later, James sold the same stock through his broker for dollar 27,000. What is the tax effect of these transactions? Disallowed loss to James of dollar 2,000; gam to Lance of dollar 1,000. Disallowed loss to Lance of dollar 2,000; gam to James of dollar 3,000. Deductible loss to Lance of dollar 2,000; gam to James of dollar 3,000. Disallowed loss to Lance of dollar 2,000; gam to James of dollar 1,000. Moving to another question will save this response.Explanation / Answer
answer is
d disallowed loss to lance of $2000, gain to james of $1000
lance loss of 2,000 (24,000 – 26,000) is disallowed. James may reduce hisrealized gain of $3,000 (27,000 – 24,000) by Lance disallowed loss of $2,000. so James’ recognised gain is $1,000
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