4. An investor buys 1,000 shares of Corp ABC on Jan. 31 2018. ABC will announce its quarterly earnings on May 15, 2018. The investor is nervous because it is afraid ABC will miss the earnings forecast and will decline in price. The investor buys 10 puts on ABC on May 14. The earnings actually exceeded the investors expectations and ABC goes way up in value. The investor sells the puts on May 16. On February 15, 2019, the investor sells the ABC stock for a substantial gain. What is the nature of the gain on the stock for federal income tax purposes? 5. An investor buys 500 shares of stock on Jan. 2, 2018 for $35,000. On November 1, 2018 the investor buys an additional 500 shares for $25,000. On November 28, the investor sells 500 shares for $22,000. The investor identifies the shares purchased on Jan. 2 as those sold. What is the amount of the gain/loss on the transaction? Is the loss currently deductible? On December 31, 2018 what is the basis of the stock acquired on November 1? How did you determine the basis of the shares? What is the holding period of the stock acquired on Nov.1 as of December 31? 6. Assume the same facts as question 4, except the investor identifies the shares acquired on November 1 as the shares sold. What is the amount of the gain/loss on the transaction? Is the loss currently deductible? On December 31, 2018 what is the basis of the stock acquired on January 2? How did you determine the basis of the shares? What is the holding period of the stock acquired on January 2 as of December 31?