LO.1, 2, 5 Kristy owns 100 shares of stock in Magenta Corporation with an adjusted basis of $5,000. On December 21, Kristy sells the stock for $12,000. She purchases 100 shares of Magenta stock on January 5 of the following year for $12,200.

a. What is Kristy trying to achieve from a tax perspective?

b. Will she succeed?

c. Assume the same facts, except that Kristy’s adjusted basis in the stock is $15,000. How does this change the answers to parts

(a) and (b)?

d. Advise Kristy on how she can avoid any negative tax consequences of part (c).