M. Camus bought 1000 shares of Oran Co. at $60 per share and 100 shares of Gitane Co. at $40 per share. Both stocks are now worth $50 per share. Both companies have offered to repurchase their shares. If M. Camus would like to have about $5,000 in cash, should he sell the Oran or Gitane?

Question

Quizplus · Accepted Answer

Selling Oran Co. would result in a loss, which can be used as a tax deduction, meaning M. Camus would end up with more than $5,000. On the other hand, selling Gitane Co. would result in a capital gain, which would be subject to taxes, leaving M. Camus with less than $5,000. Therefore, selling Oran Co. would be the best choice to reach the desired cash amount.

M Camus Bought 1000 Shares of Oran Co