Question
A sells 1,000 shares of IBM for a loss of $25,000 on 2/7/2016. The shares were acquired on 1/5/2016. On 2/13/2016 A acquires call options
A sells 1,000 shares of IBM for a loss of $25,000 on 2/7/2016. The shares were acquired on 1/5/2016. On 2/13/2016 A acquires call options for $5,000 to purchase 1,000 shares of IBM that are way out of the money. The calls do not expire until March 2017. In 2017 they expire worthless. Can A recognize the $25,000 loss in 2016? How much loss will A recognize on the IBM calls in 2017? What is the nature of the loss?
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Comparative international accounting
Authors: Christopher nobes, Robert parker
9th Edition
273703579, 978-0273703570
