On July 1,2010,Brandon Purchased an Option to Buy 1,000 Shares

question 115

Multiple Choice

On July 1,2010,Brandon purchased an option to buy 1,000 shares of General,Inc.at $30 per share.He purchased the option for $2,000.It was to remain in effect for five months.The market experienced a decline during the latter part of the year,so Brandon decided to let the option lapse as of December 1,2010.On his 2010 tax return,what should Brandon report?

• A)A $2,000 long-term capital loss.
• B)A $2,000 short-term capital loss.
• C)A $2,000 § 1231 loss.
• D)A $2,000 ordinary loss.
• E)None of the above.

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Definitions:

Capacitor Voltage

The electrical potential difference across the terminals of a capacitor, dependent on the charge stored and the capacitor's capacitance.

Phase

A stage in a cycle of changes or in the variation of a periodic function, especially referring to the relationship between oscillations or waves in a system.

RC Parallel Circuit

A circuit configuration consisting of resistors and capacitors connected in parallel, affecting the total impedance and phase angle of the circuit.

R

A symbol often used to represent resistance in electrical circuits.