Efrain owns 1,000 shares of RJ Inc.common stock which he purchased three years ago for $36,000.Efrain sells the 1,000 shares on October 15,2017,for $10,000.On November 12,he purchases 400 shares of RJ Inc.preferred stock for $8,000.Efrain's recognized loss on the sale of the 1,000 shares will be

Question

Quizplus · Accepted Answer

D)Preferred stock is not considered substantially identical to common stock of the same corporation and wash sale rules will not apply.Therefore,the loss of $26,000 ($10,000 - $36,000)is allowed.

Efrain Owns 1,000 Shares of RJ Inc