Question
Preston purchases 1,000 shs of BIG Corp on April 1, 20x1 for $2,500 She sells short 1,000 shs of BIG Corp on December 1, 20x1,
Preston purchases 1,000 shs of BIG Corp on April 1, 20x1 for $2,500
She sells short 1,000 shs of BIG Corp on December 1, 20x1, for $3,750. This short sale results in a constructive sale.
She closes the short sale on January 15, 20x2, by purchasing & delivering 1,000 shs of BIG Corp for $3,250.
She sells the original position on December 15, 20x2 for $3,000.
What is the amount and character of taxable income that Preston must recognize in 20x2?
| a. | $250 short-term capital loss | |
| b. | $1,000 short-term capital loss | |
| c. | $500 short-term capital gain & $500 long-term capital gain | |
| d. | $1,000 short-term capital gain |
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Horngrens Financial & Managerial Accounting, The Financial Chapters
Authors: Tracie Miller Nobles, Brenda Mattison
7th Edition
0136505279, 9780136505273
