55. Wilma had a number of stock transactions during the year that resulted in an

Question

55. Wilma had a number of stock transactions during the year that resulted in an $18,000 capital loss. She has one stock remaining in her portfolio and would realize a $16,000 capital gain if she sold it now. She believes this stock is going to continue to increase in value an is reluctant to sell it. What do you suggest that Wilma do? 55. Wilma had a number of stock transactions during the year that resulted in an $18,000 capital loss. She has one stock remaining in her portfolio and would realize a $16,000 capital gain if she sold it now. She believes this stock is going to continue to increase in value an is reluctant to sell it. What do you suggest that Wilma do?

Explanation / Answer

To reduce her tax implications she can immediately sell the stock and realize a gain of 16,000 which would be offset by a loss of 18,000. She should again buy the stock so now the cost basis for future tax computation would be higher and gain realized would be based on the future price and the current stock price instead of the price she had brought earlier.

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