Ms.Fresh bought 1,000 shares of Ibis Corporation stock for $5,000 on January 15, 2011.On December 31, 2019, she sold all 1,000 shares of her Ibis stock for $4,500.Based on a hot tip from her friend, she bought 1,000 shares of Ibis stock on January 23, 2020, for $3,000.What is Ms.Fresh's recognized loss on her 2019 sale and what is her basis in her 1,000 shares purchased in 2020?

Question

Quizplus · Accepted Answer

Ms. Fresh's sale of Ibis stock in 2019 resulted in a $500 loss ($5,000 - $4,500). However, because she repurchased the same stock within 30 days, the wash sale rule applies, disallowing the loss. The disallowed loss of $500 is added to the basis of the new shares, making the basis $3,500 ($3,000 + $500).

MsFresh Bought 1,000 Shares of Ibis Corporation Stock for $5,000