Rayyan Kouri Purchased 1000 Shares in TRI Co

question 11

Multiple Choice

Rayyan Kouri purchased 1000 shares in TRI Co.in 2019 for $5 per share.Due to a decline in market value Rayyan sold the shares on September 22, 2020, when they were trading for $3 per share.On October 3, 2020, Rayyan repurchased 1000 shares of Y Co.at $2.50 per share.Which of the following is true for Rayyan?

• A)Rayyan can recognize a $2,000 capital loss on the sale of the shares in the 2020 tax year.
• B)Rayyan can recognize a $2,000 superficial loss on the sale of the shares in the 2020 tax year.
• C)The adjusted cost base of Rayyan's new shares is $4,500.
• D)The adjusted cost base of Rayyan's new shares is $2,500.

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Definitions:

Cash Discount

A reduction in the price of goods or services offered by the seller to the buyer for prompt payment.

Credit Cost Curve

Illustrates the relationship between the cost of credit (interest rates) and the amount of credit available in the market.

Carrying Cost Curve

A graphical representation showing the total cost of holding inventory over time.

Opportunity Cost Curve

A graphical representation that shows the trade-offs between two options, highlighting what is sacrificed when choosing one option over another.