On June 1, 2017, Brady Purchased an Option to Buy

question 21

Multiple Choice

On June 1, 2017, Brady purchased an option to buy 1,000 shares of General, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Brady decided to let the option lapse as of December 1, 2017. On his 2017 tax return, what should Brady report?

• A)A $3,000 long-term capital loss.
• B)A $3,000 short-term capital loss.
• C)A $3,000 § 1231 loss.
• D)A $3,000 ordinary loss.
• E)None of the above.

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Definitions:

Proposition

An affirmation that offers an opinion or judgment.

Implicit Memory

Unconscious recall, generally of habits and skills; sometimes called procedural memory.

Explicit Memory

Intentional and conscious memory, generally of facts, names, and events.

Extra-sensory Perception

The claimed ability to gain information through means beyond the traditional five senses; also known as ESP or sixth sense.