Basis in Securities (LO. 8) On Novermber 14, 2017, Noel sells 2,0o0 shares of Ma

Question

Basis in Securities (LO. 8) On Novermber 14, 2017, Noel sells 2,0o0 shares of Marker, Inc. stock for $6,000. He had purchased the stock two years earlier for $10,000. Beca use the price of the stock continued to drop, Noel purchases additional shares of Marker stock on December 10, 2017 Considering the following repurchase scenarios, what are the tax effects of the sale of the stock and the basis in the nevr shares a. 2,000 shares for $5,000: The 2,000 shares were replaced V and the entire loss is disallowed. The nev basis is $ loss on the 800 shares b. 800 shares for $2,000: $ replaced is disallowed .The new basis is $ c. 4,000 shares for $9,000: The 2.000 shares were replaced and for the the loss disallowed replacement shares and s not part of the vash sale. he nevr basis st for the shares that were

Explanation / Answer

A. New basis = 5000+(10000-6000) = 5000+4000= 9000

B. $1600(4000*800/2000) loss on the 800 shares replaced is disallowed. The new basis is $3600(2000+1600)

C. The new basis is $8509(4500+4000) for the replacement shares and $4500 for the shares that were not part of the wash sale.

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