Chana purchased 400 shares of Tronco Corporation stock for $40,000 in 2014.On December 27,2017,Chana sells the 400 shares for $24,000.Chana purchases 300 shares of Tronco Corporation stock on January 16,2018 for $8,000.Chana's recognized loss on sale of the 400 shares in 2017 and her basis in her 300 new shares are

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B) The realized loss on the 400 shares is $16,000 ($24,000 - $40,000). $16,000 × 300/400 = $12,000 is disallowed due to the wash sale. $16,000 - $12,000 = $4,000 allowed loss in 2017. The basis of the new shares is the $8,000 cost plus the $12,000 unrecognized loss = $20,000 basis in new stock.

Chana Purchased 400 Shares of Tronco Corporation Stock for $40,000