Question

Mr. and Mrs. Johnson sold 1000 shares of LPK Corp. stock, with a cost basis of 27 per share for20 per share. The shares had been held for 4 years after the purchase date. How much of the loss can the couple claim for this year, assuming no other potential transactions?

Answer 1

Mr. and Mrs. Johnson can claim a loss of $7,000 for the year, as they sold their 1000 shares at a loss of $7 per share (purchased at $27, sold at $20).

The subject of this question is mathematics, specifically dealing with the calculation of profit or loss from stock transactions. The Johnsons had a cost basis of $27 per share and sold their shares at $20 per share. For 1000 shares, the total cost basis is 1000 shares * $27/share = $27,000. The total amount for which they sold the shares is 1000 shares * $20/share = $20,000. The loss is therefore the cost basis minus the selling price, which is $27,000 - $20,000 = $7,000.