Lena bought 100 shares of General Motors stock at $80 a share.Assuming a share value of $50 at tax-year end,Lena should consider which of the following tax strategies?

Question

Quizplus · Accepted Answer

Selling the GM shares and buying Ford shares is a strategy known as "tax-loss harvesting." It allows Lena to realize a loss for tax purposes, which can offset other capital gains or up to $3,000 of ordinary income. This strategy involves selling a security that has experienced a loss and then buying a similar, but not identical, security to maintain a similar investment position. Option C is the only one that directly aligns with this strategy, as selling GM and buying Ford allows for a realization of losses while staying invested in the automotive sector.

Lena Bought 100 Shares of General Motors Stock at $80