Hamlet, a calendar year taxpayer, owns 1,000 shares of Vanity Corporation common stock, which he purchased two years ago for $4,000. Hamlet sells all of his shares on December 29, 2013, for $2,500. On January 23, 2014, he purchases 600 shares of Vanity Corporation common stock. What is the amount of Hamlet's recognized loss in 2013?

Question

Quizplus · Accepted Answer

The loss is recognized in the year of sale, which is 2013. The amount of the loss is the difference between the sale price and the cost basis, which is $2,500 - $4,000 = -$1,500. However, losses on the sale of stock are not deductible for individual taxpayers, so the recognized loss is $0.

Hamlet, a Calendar Year Taxpayer, Owns 1,000 Shares of Vanity