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Cassie is a stockholder in Witch Corporation. On January 1, 2020, her ownership was: Shares: 1,000 Basis 200,000 Acquisition Date: 1/1/2010 On April 1, 2020,
Cassie is a stockholder in Witch Corporation. On January 1, 2020, her ownership was: | ||||||||
Shares: | 1,000 | |||||||
Basis | 200,000 | |||||||
Acquisition Date: | 1/1/2010 | |||||||
On April 1, 2020, Witch Corporation was trading at $ | 500 | per share. On that date it issued | ||||||
a one for one stock warrant to all shareholders (one warrant was issued for each share owned). | ||||||||
The warrants were issued proportionately to all common stockholders. The warrants gave | ||||||||
the holder the right to purchase stock in Witch Corporation at $ | 400 | per share at any time | ||||||
in the next six months. |
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What are the tax consequences to Cassie if she sells 500 warrants on June 1, 2020 for $100 per warrant? |
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