Melonie purchased 100 shares of Wake Corporation stock for $6 per share on August 3,2015.On December 18,2016,Melonie sells all 100 shares for $4 per share.On January 5,2017,Melonie purchases 50 shares of Wake stock for $5 per share.What is the basis of the 50 shares Melonie holds on January 5,2017?

Question

Quizplus · Accepted Answer

The basis of the 100 shares purchased on August 3, 2015, is $600 (100 shares x $6 per share). 
When Melonie sells all 100 shares for $4 per share on December 18, 2016, she gets $400 (100 shares x $4 per share), resulting in a loss of $200 ($600 - $400). 
When Melonie purchases 50 shares on January 5, 2017, she does not have any loss or gain to carry over from the previous shares because she sold all 100 of them. 
Therefore, the basis of the 50 shares purchased on January 5, 2017, is simply the cost of the shares, which is $250 (50 shares x $5 per share).

Melonie Purchased 100 Shares of Wake Corporation Stock for $6