Question

LeBron buys 500 shares of Tiger Corporation for $10 a share. The corporation’s president is caught committing fraud and the stock drops to $3 a share. LeBron sells all his shares. How much can he take off his income as a capital loss this year?

Answer 1

$3,500

Explanation:

First, Lets analyze the problem.

LeBron buys 500 shares for $10 a share. So he buys 500 shares for $5,000.

Now the price drops to $3, he had 500 stocks, the stocks are now only worth $1500.

5000-1500=3,500

He has lost $3,500 in the Tiger Corporation shares.