On July 1, 2019, Janett Koenen acquired 1,000 shares of Techhab Inc. for $10 per share. The purchase was financed with a $10,000 bank loan, requiring annual interest payments of 5 percent. These shares were sold on December 1, 2019 for $6 per share, with the proceeds immediately invested in 500 Flexhub Ltd. shares at $12 per share. During 2020, the Flexhub shares pay eligible dividends of $0.50 per share. The bank loan was not repaid in 2019 and remains outstanding on December 31, 2020. On her 2020 tax return, Janett will report:

Question

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Janett's net property loss calculation involves the interest paid on the loan and the dividends received. The interest for 2020 is $500 (5% of $10,000). The dividends from Flexhub shares are $250 (500 shares * $0.50). The net property loss is $250 (dividends) - $500 (interest) = -$250. However, the initial calculation did not account for the capital loss realized in 2019 from selling the Techhab shares, which does not directly affect the net property income or loss for 2020 as calculated for tax purposes. The correct focus is on the income components (interest expense and dividend income) for the 2020 tax year.

On July 1, 2019, Janett Koenen Acquired 1,000 Shares of Techhab