Chana purchased 400 shares of Tronco Corporation stock for $40,000 in 2014. On December 27, 2018, Chana sells the 400 shares for $24,000. Chana purchases 300 shares of Tronco Corporation stock on January 16, 2019 for $8,000. Chana's recognized loss on sale of the 400 shares in 2018 and her basis in her 300 new shares are
A)
B)
C)
D)
B)
The realized loss on the 400 shares is $16,000 ($24,000 - $40,000). $16,000 × 300/400 = $12,000 is disallowed due to the wash sale. $16,000 - $12,000 = $4,000 allowed loss in 2018. The basis of the new shares is the $8,000 cost plus the $12,000 unrecognized loss = $20,000 basis in new stock.
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