Annabelle, a trader in securities, works for a national securities firm. She occasionally buys and sells securities for her personal account. On May 10, 2018, she purchased 100 shares of Acorn, Inc. common stock for a total of $40,000. She sold all of those shares for a total of $46,000 on July 11, 2019. What was the amount and nature of her gain or loss from this transaction? What could she have done to change this result?
What will be an ideal response?
The ordinary gain is $6,000. Since Annabelle is in the business of buying and selling securities, the ones that she buys for her personal account are ordinary assets. She has a $6,000 ($46,000 sale price - $40,000 basis) ordinary gain from the disposition of the Acorn stock. If she had designated the Acorn stock as held for investment by the end of the day she purchased it, the gain would have been long-term capital gain.
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