Ms. Fresh bought 1,000 shares of Ibis Corporation stock for $6,900 on January 15, 2018. On December 31, 2020, she sold all 1,000 shares of her Ibis stock for $5,450. Based on a hot tip from her friend, she bought 1,000 shares of Ibis stock on January 23, 2021, for $3,475. What is Ms. Fresh's recognized loss on her 2020 sale, and what is her basis in her 1,000 shares purchased in 2021?

Question

Quizplus · Accepted Answer

Ms. Fresh's sale of Ibis stock in 2020 resulted in a loss of $1,450 ($6,900 - $5,450). However, because she repurchased the same stock within 30 days, the wash sale rule applies, disallowing the loss. The disallowed loss of $1,450 is added to the basis of the new shares, making the basis $4,925 ($3,475 + $1,450).

Ms Fresh Bought 1,000 Shares of Ibis Corporation Stock for $6,900