In 2008, Jane Jones pays $2,500 for 1,000 shares of ABC common stock. On August 27, 2012, Jane purchases an additional 250 shares of ABC common stock for $600. On September 5, 2012, she sells the 1,000 shares purchased in 2008 for $1,800. Jane's basis in the shares of stock purchased on August 27, 2012 is:

Question

Quizplus · Accepted Answer

Of the $700 realized loss, $175 is disallowed (250/1000 = 25% × ($1,800 - $2,500). the disallowed loss increases the taxpayer's basis in the 250 shares to $775 ($600 plus $175).

In 2008, Jane Jones Pays $2,500 for 1,000 Shares of ABC