Oliver purchased the following stock of Doggie Treats Inc. If Oliver sold 25 shares of stock in 2014 for $265,what is the loss on the sale of the stock? Assume the shares purchased in 2013 were held for more than one year.

Question

Oliver purchased the following stock of Doggie Treats Inc.  If Oliver sold 25 shares of stock in 2014 for $265,what is the loss on the sale of the stock? Assume the shares purchased in 2013 were held for more than one year.

Quizplus · Accepted Answer

Since the shares purchased in 2013 were held for more than one year, they are considered long-term holdings. Therefore, the loss on the sale of the 25 shares would be a long-term loss. To calculate the loss, first find the cost basis of the 25 shares:

11ea71e9_43eb_d9ab_91e5_3f8e9953ae1e_TB3403_00 x 25 shares = $250

The amount sold for ($265) minus the cost basis ($250) equals the loss:

$265 - $250 = $15

Since this loss came from the sale of long-term holdings, it is a long-term loss. Divide the loss evenly among the shares sold to find the loss per share:

$15 ÷ 25 shares = $0.60 per share

Therefore the loss on the sale of the stock is $0.60 x 28 shares = $16.80. This means that the correct answer is D) $8.00 long-term loss and $17.00 short-term loss.

Oliver Purchased the Following Stock of Doggie Treats Inc