Question

Mr. and Mrs. Garcia purchased 200 shares of stock for $55 per share on September 30,...

Mr. and Mrs. Garcia purchased 200 shares of stock for $55 per share on September 30, 2018. On June 30, 2020, the Garcia family decides to sell these shares for $40 generating a loss of $15 per share. On July 15, 2020, the Garcia family realized they made a mistake and repurchased 200 shares for $45 per share.

How much of the loss will the Garcia family be able to deduct in 2020?

What is their basis in the 200 shares that they repurchased?

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Answer #1

How much of the loss will the Garcia family be able to deduct in 2020-

Answer - Nil

Though they made a loss of $ 15 per share by selling 200 shares of stock Gracia Family will not be able to dedcut any loss in2020.This is because repurchased the same share stock within 30 days .IRS states any loss made from sale of stock which is repurchased within 30days from date of sale cannot be setoff against reported income

What is their basis in the 200 shares that they repurchased

Answer- $ 60 basis per share ,$ 12,000 for 200 shares

The basis in the 200 shares that they repurchased will be the cost plus loss on sale of the sahre stock  which was not allowed to be deducted . .Hence their basis will be cost $ 45 plus loss of $ 15 on sale which they were not allowed to dedcution,Thus the basis will be $ 60 per share stock

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