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

question 21

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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?


Definitions:

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets.

Balance Sheet

A report showing a firm's holdings, debts, and owner's equity on a certain date.

Corporation

A legal entity separate from its owners, with rights and responsibilities, capable of entering contracts, suing, and being sued.

Business Segment

A division within a company that generates revenues and incurs expenses related to different products, services, or geographic areas.

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