Melonie purchased 100 shares of Wake Corporation stock for $6 per share on August 3,2014.On December 18,2015,Melonie sells all 100 shares for $4 per share.On January 5,2016,Melonie purchases 50 shares of Wake stock for $5 per share.What is the basis of the 50 shares Melonie holds on January 5,2016?
A)- 0 -
B)$50
C)$250
D)$450
E)$650

Question

Quizplus · Accepted Answer

The basis of the 100 shares purchased on August 3, 2014 is:
100 shares x $6 per share = $600
Melonie sells all 100 shares on December 18, 2015 for $4 per share, resulting in a loss of:
100 shares x ($4 per share - $6 per share) = -$200
Therefore, Melonie has a net loss of $200 from selling the 100 shares. When she purchases 50 shares on January 5, 2016 for $5 per share, the basis of these shares will be adjusted by the amount of the net loss. The adjusted basis is:
($600 - $200)/100 shares = $4 per share
The basis of the 50 shares Melonie holds on January 5, 2016 is:
50 shares x $4 per share = $200
So, the correct answer is option D.

Melonie Purchased 100 Shares of Wake Corporation Stock for $6