In January, Lance Sold Stock with a Cost Basis of $26,000

question 107

Multiple Choice

In January, Lance sold stock with a cost basis of $26,000 to his brother, James, for $24,000, the fair market value of the stock on the date of sale. Five months later, James sold the same stock through his broker for $27,000. What is the tax effect of these transactions?

• A) Disallowed loss to James of $2,000? gain to Lance of $1,000.
• B) Disallowed loss to Lance of $2,000? gain to James of $3,000.
• C) Deductible loss to Lance of $2,000? gain to James of $3,000.
• D) Disallowed loss to Lance of $2,000? gain to James of $1,000.
• E) None of the above.

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Definitions:

Advance Directives

Legal documents that allow individuals to outline their preferences for medical care if they become unable to make decisions for themselves.

Legal Requirement

A rule or regulation enacted by a governing body that is binding and must be followed by individuals or entities under its jurisdiction.

Patient Admission

The process of registering and accepting a patient into a healthcare facility for treatment and care.

Incorrect Dosage

Administration of a medication in quantities other than those prescribed, potentially leading to adverse effects or inefficacy.