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 acquired 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 acquired 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 worthlessly. 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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Here in the example A has made loss on two counts The 1st loss is incurred when the shares acquired ...
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Using Financial Accounting Information The Alternative to Debits and Credits
Authors: Gary A. Porter, Curtis L. Norton
7th Edition
978-0-538-4527, 0-538-45274-9, 978-1133161646
