Lewis owns 200 shares of stock in Modlin Corporation. His adjusted basis for the stock is $180,000.

Question:

Lewis owns 200 shares of stock in Modlin Corporation. His adjusted basis for the stock is $180,000. On December 15, 2015, he sells the stock for $170,000. He purchases 200 shares of Modlin Corporation stock on January 8, 2016, for $170,000.

a. What are Lewis's realized and recognized gain or loss on the sale?

b. What is Lewis's adjusted basis for the 200 shares purchased on January 8, 2016?

c. How would your answers in (a) and (b) change if he purchased only 100 shares for $105,000 in January?

d. What tax treatment is Lewis trying to achieve?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...