On July 1,2010,Brandon purchased an option to buy 1,000 shares of General,Inc.at $30 per share.He purchased the option for $2,000.It was to remain in effect for five months.The market experienced a decline during the latter part of the year,so Brandon decided to let the option lapse as of December 1,2010.On his 2010 tax return,what should Brandon report?

Question

Quizplus · Accepted Answer

The purchase of the option for $2,000 is treated as a short-term capital loss since the option expired within a year of purchase and was not exercised. Therefore, Brandon should report a $2,000 short-term capital loss on his 2010 tax return. None of the other choices are applicable to this situation.

On July 1,2010,Brandon Purchased an Option to Buy 1,000 Shares