1a. An investor buys 500 shares of stock on Jan. 2, 2013 for$35,000. On November 1, 2013 the investo

1a. An investor buys 500 shares of stock on Jan. 2, 2013 for$35,000. On November 1, 2013 the investor buys an additional 500shares for $25,000. On November 28, the investor sells 500 sharesfor $27,000. The investor identifies the shares purchased on Jan. 2as those sold. What is the amount of the gain/loss on thetransaction? Is the loss currently deductible? On December 31, 2013what is the basis of the stock acquired on November 1? How did youdetermine the basis of the shares? What is the holding period ofthe stock acquired on Nov.1 on December 31? 1b. Describe 2 methods that a taxpayer can utilize to avoid thewash sale rules that minimizes the pre-tax economic effects?Investor A owns 1,000 shares of XYZ stock. Investor A buys 10 calloptions on XYZ stock. Investor B also owns 1,000 shares of XYZstock and sells 10 call options on XYZ stock. A’s basis in hisshares is $20,000 and B’s basis in her shares is $12,000. Both Aand B owned their shares for 5 years prior to entering into any ofthe option transactions. A exercises his options and B is assignedon her options. Both A and B have 100,000 of short-term capitalgains and $75,000 of long-term capital gains from other unrelatedtransactions. Both A and B are in the highest marginal tax bracket.The options were exercised on the day that they expired. Theoptions are listed and have the following terms: 1c. XYZ 75 July – The price quoted is $3.50. A. – Explain theterms of the options. B. – After A exercises his options how manyshares of XYZ will he own? Will A recognize any gain or loss onthese transactions? If so, how much? What will its character be? C.- After B is assigned on her options how many shares of XYZ willshe own? What will the basis in her shares be? Will B recognize anygain or loss on these transactions? If so, how much? What will itscharacter be? 1d. If XYZ was trading at $100 per share, the day before theoptions expired, could either of these investors have donesomething to enhance their tax position? 1e. An investor sells short 1,000 shares of ABC at $80 per shareon July 1, 2017. On July 23, 2017, the investor makes an in-lieu-of dividend to the lender of the shares for $1 per share. On August1, 2017 the investor buys 1,000 shares of ABC for $73 per share anddelivers them to the lender on August 4, 2017 to close the shortsale. What is the investor’s gain/loss on the short sale forfederal income tax purposes? Is the gain/loss long-term or shortterm? . . .

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