Mitch Owns 1,000 Shares of Oriole Corporation Common Stock (Adjusted

question 231

Essay

Mitch owns 1,000 shares of Oriole Corporation common stock (adjusted basis of $15,000). On April 27, 2014, he sells 400 shares for $5,200, while on May 5, 2014, he purchases 200 shares for $3,600.
a. What is Mitch's recognized gain or loss resulting from these transactions?
b. What is Mitch's basis for the stock acquired on May 5, 2014?
c. Could Mitch have obtained different tax consequences in a. and b. if he had sold the 400 shares on December 27, 2014, and purchased the 200 shares on January 5, 2015?

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Definitions:

Rough Endoplasmic Reticulum

A network of tubular membranes within the cytoplasm of the cell studded with ribosomes involved in the synthesis of proteins.

Enteric Nervous System

Known as the "second brain," this extensive mesh-like system of neurons controls the function of the gastrointestinal system.

Digestive Tract

The series of hollow organs joined in a long, twisting tube from the mouth to the anus, where digestion of food occurs.

Presynaptic Terminals

The ends of axons where neurotransmitters are stored before being released across the synaptic cleft to transmit nerve impulses.