Karen Purchased 100 Shares of Gold Corporation Stock for $11,500

question 230

Multiple Choice

Karen purchased 100 shares of Gold Corporation stock for $11,500 on January 1, 2015. In the current tax year (2018) , she sells 25 shares of the 100 shares purchased on January 1, 2015, for $2,500. Twenty-five days earlier, she had purchased 30 shares for $3,000. What is Karen's recognized gain or loss on the sale of the stock, and what is her basis in the 30 shares purchased 25 days earlier?

• A) $375 recognized loss, $3,000 basis in new stock.
• B) $0 recognized loss, $3,000 basis in new stock.
• C) $0 recognized loss, $3,375 basis in new stock.
• D) $0 recognized loss, $3,450 basis in new stock.
• E) None of the above.

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Definitions:

Rental Income

Revenue generated by leasing property or equipment.

Primarily Rental

Pertaining to the use of property mainly for rental purposes, which may affect the tax treatment of income and expenses related to the property.

Primarily Personal

This term typically pertains to expenses or activities that are mainly for personal benefit, and therefore, not deductible for tax purposes if related to business.

Net Loss

The result when a company's expenses exceed its revenues during a specific period, indicating negative profitability.