Karen purchased 100 shares of Gold Corporation stock for $11,500 on January 1, 2011. In the current tax year (2014), she sells 25 shares of the 100 shares purchased on January 1, 2011, for $2,500. Twenty-five days earlier, she had purchased 30 shares for $3,000. What is Karen's recognized gain or loss on the sale of the stock, and what is her basis in the 30 shares purchased 25 days earlier?

Question

Quizplus · Accepted Answer

Karen's sale of 25 shares results in a wash sale because she purchased substantially identical stock within 30 days before the sale. The loss of $375 ($2,500 sale proceeds - $2,875 cost basis) is disallowed and added to the basis of the new shares, making the basis $3,375 ($3,000 + $375).

Karen Purchased 100 Shares of Gold Corporation Stock for $11,500