Mitch Owns 1,000 Shares of Oriole Corporation Common Stock (Adjusted

question 191

Essay

Mitch owns 1,000 shares of Oriole Corporation common stock (adjusted basis of $15,000). On April 27, 2018, he sells 400 shares for $5,200, while on May 5, 2018, he purchases 200 shares for $3,600.
a. What is Mitch's recognized gain or loss resulting from these transactions?
b. What is Mitch's basis for the stock acquired on May 5, 2018?
c. Could Mitch have obtained different tax consequences in a. and b. if he had sold the 400 shares on December 27, 2018, and purchased the 200 shares on January 5, 2019?

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Definitions:

Tax Burden

The impact of taxes on an individual or entity, measured by the total amount of tax payments relative to income or profits.

Rate Structure

The system or scheme of pricing established for services and goods, including the way different charges or tariffs are applied.

Cigarette Supply

The total quantity of cigarettes that producers are willing and able to sell at a given price over a specific period.