17. LO.1 Faith Godwin is a dealer in securities. She has spotted a fast-rising company and would...

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17. LO.1 Faith Godwin is a dealer in securities. She has spotted a fast-rising company and would like to buy and hold its stock for investment. The stock is currently selling for $2 per share, and Faith thinks it will climb to $40 a share within two years.

Faith’s coworkers have told her that there is “no way” she can get long-term capital gain treatment when she purchases stock because she is a securities dealer. Faith has asked you to calculate her potential gain and tell her whether her coworkers are right. Draft a letter to Faith, responding to her request. Her address is 200 Catamon Drive, Great Falls, MT 59406.

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