Question

Christina, who is single, purchased 500 shares of Apple Inc. stock several years ago for $21,000. During her year-end tax planning, she decided to sell 250 shares of Apple for $9,250 on December 30. However, two weeks later, Apple introduced its latest iPhone, and she decided that she should buy the 250 shares (cost of $9,750) of Apple back before prices skyrocket. (Leave no answers blank. Enter zero if applicable.)

b. Assume the same facts, except that Christina repurchased only 125 shares for $4,875. What is Christina’s deductible loss on the sale of 250 shares? What is her basis in the 125 new shares?

Answer 1

B.) Loss for Christina (sell of 250 shares of apple) =

$9,250 - [ $21,000 * 0.50 ] = $1,250

Since, Christina repurchased 125 shares of identical stock of Apple Inc. within 30 days of selling the 250 shares. This, as per wash sales rules she is eligible to deduct [($1,250/250 shares) * 125 shares

= $625

Christina's deductible loss on the sale of 250 shares = $625

Christina's basis in the 125 new shares =

Purchase Cost of 125 shares + Disallowed loss on sale of 250 shares

= $4,875 + ($1,250 - $625)

= $4,875 + $625

= $5,500