Question

Christina, who is single, purchased 540 shares of Apple Inc. stock several years ago for $21,600....

Christina, who is single, purchased 540 shares of Apple Inc. stock several years ago for $21,600. During her year-end tax planning, she decided to sell 270 shares of Apple for $9,450 on December 30. However, two weeks later, Apple introduced its latest iPhone, and she decided that she should buy the 270 shares (cost of $9,990) of Apple back before prices skyrocket. (Leave no answers blank. Enter zero if applicable.)


a. What is Christina's deductible loss on the sale of 270 shares? What is her basis in the 270 new shares?

b. Assume the same facts, except that Christina repurchased only 135 shares for $4,995. What is Christina’s deductible loss on the sale of 270 shares? What is her basis in the 135 new shares?

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Answer #1

a. Deductible Loss on sale of 270 share is:-

(9450-9990) = $540

Her basis of buying 270 shares is that If a company launches new product and if the same receives positive feedback from market, there are huge chance of stock price shooting up. So her basis of buying is perfect.

b.If she repurchased 135 shares only then her deductible loss will be:-

Cost of 135 shares:- $4995

Sell price of old 135 share:- $4725

Total Loss is :- (4725-4995)*135 = $36,450

Her basis of buying 135 share is if product didn't receive good response or mix response then there might be a sell of and prices will come down in near future.

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