Assume the client purchased 100 shares of stock in XYZ Corporation for $300 in 20X1.

On 12/20/X2, the client purchased an additional 100 shares in the company for $200. On

12/27/X2, the client sold the 100 shares acquired in 20X1 for $210. Since a purchase of

substantially identical securities occurred only 7 days earlier, the loss of $90 on 12/27/X2

cannot be deducted. Instead, under the wash sale rules:

A. the basis of the shares acquired on 12/20/X2 is increased

by $90 to $300.

B. the basis of the shares acquired on 12/20/X2 is increased

by $200 to $210.

C. the basis of the shares acquired on 12/20/X2 is increased

by $290 to $300.

D. the basis of the shares acquired on 12/20/X2 is increased

by $90 to $290.