R2 M2 Gain & Losses

Question 1

Jan 1 Yr 1 Bought 30shares at $5

June Yr 2 he sold 30 shares at $3.00

Jul 15 yr 2 bought 20 shares at $2.00

Jul 17 yr 2 sold 20 shares at $2.50

Calculate the realized gain (loss), calculate the recognized gain or loss

Answer 1

Remember certain loss are not deductible “WRAP”

Wash sale; Related party transaction; personal losses

Wash sale is when stock is sold at a loss and repurchased within 30 days, the loss is disallowed and will be deferred.

Realized gain (loss) = Sales Proceeds - Basis
90 - 150 = -60

Jul 15 Yr2 - bought 20 shares at @ $2.00 = $40

Recognized gain or loss now deferred -> Realized - Deferred
$60.00 - $40.00 = ($20.00)

New Basis is bought $40.0 ($20 x 2) + Disallowed loss of $40 from the June 30, Yr 2 wash Sale = $80.00

Question 2

Wash sales only deal with losses.