Question

Melonie purchased 100 shares of Wake Corporation stock for $6 per share on August 3, 2017. On December 18, 2018, Melonie sells all 100 shares for $4 per share. On January 5, 2019, Melonie purchases 50 shares of Wake stock for $5 per share. What is the basis of the 50 shares Melonie holds on January 5, 2019?

a.$50
b.- 0 -
c.$650
d.$250 e.$350

Answer 1

The answer is option (a)=$50

Step-by-step explanation:

Basis of the 50 shares Melonie purchased can be described as its value;

Value of shares purchased on August 3, 2017=(value per share×number of shares)

August 3, 2017 value=(6×100)=$600

Value of shares sold on December 18, 2018=(100×4)=$400

Balance of shares=0

Value balance after sale=(400-600)=-200, she went on a loss of $200

January 5, 2019 purchase 50 shares at 5 dollars each

Total value=(50×5)=250

Total value she has by January 5, 2019=250+(-200)=50

Basis of the 50 shares she has=$50