Mandy Holds Shares in Y Co

question 6

Multiple Choice

Mandy holds shares in Y Co.Recently,the shares have been experiencing a decline in market value.She originally purchased 1000 shares in 20X0 at $5 per share.On September 22^nd of 20X1 she sold the shares when they were trading for only $3 per share.On October 3^rd she felt optimistic that the market value would rise substantially by the end of the year,so she repurchased 1000 shares of Y Co.at $2.50 per share.Which of the following is true for Mandy?

• A) Mandy can recognize a $2,000 capital loss on the sale of her shares on her 20X1 tax return.
• B) Mandy can recognize a $2,000 superficial loss on the sale of her shares on her 20X1 tax return.
• C) The adjusted cost base of Mandy's new shares is $4,500.
• D) The adjusted cost base of Mandy's new shares is $2,500.

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