Question

On August 1, 2018, Kira purchased 100 shares of ITC stock for $5,000. There were no subsequent adjustments to her basis. On August 1, 2019, she sold 50 shares for $1,800. On August 31, 2019, she sold the other 50 shares for $3,400. Kira has a: ___________

a. Short-term loss of $200.
b. Short-term loss of $700 and a long-term gain of $900.
c. Long-term gain of $200.
d. Long-term loss of $700 and a short-term gain of $200.

Answer 1

b. Short-term loss of $700 and a long-term gain of $900.

Step-by-step explanation:

August 1, 2018, price per share $50

August 1, 2019, sold 50 shares at $36, resulting in a short term capital loss of ($700)

August 31, 2019, sold 50 shares at $68, resulting in a long term capital gain of $900

If you own a stock for 1 year or less, any gain/loss will be considered short term. If you own a stock for more than 1 year, any gain/loss will be considered long term.