[HereGoesNothing]

This question is part of a Becker simulation:

“Taxpayer purchased 500 shares of Southwestern Energy

Corp for $10/share on 7/15/05. TP sold the 500 shares on

3/2/08 for $7/share. On 3/31/08, the taxpayer purchased

500 shares of southwestern energy for $8/share, sold the

entire lot for $9/share on 10/31/08 and did not

repurchase. Calc 2008 info.”

The answers are as follows:

Proceeds: $4,500

Basis: $5,500

gain or (loss): $1,000

Amnt to be reported on tax return: $1,000

Now I know why the basis is 5500 because of was sales of

1500. 4000+1500=5500

My problem comes in when looking at the gain. Becker says there is a $1,000 gain but gives no explanation. I am calculating a loss of 1,000 by taking the realized loss of 1,500 and subtracting the 500 gain on the sale (4500-4000). Does anyone have any insite on how they are calcuating a gain in this situation.

My test is in less than a week, any insite would be a great help. Thanks!!!

REG (7/2/2012) - 81
BEC (8/29/2012) - 75
FAR
AUD (1/7/2013) - 89

[JakeO]

I am getting a $1000 loss as well…so definitely would appreciate some clarification if anyone knows what's going on.

AUD-Failed (Waiting for Score)
BEC-PASSED (First try)
REG-Failed (Retake February 2013)
FAR-Failed (Retake January 2013)

[forever4]

i think it might be a mistake of Becker! It should be 1000 loss!

FAR 5/14 88 PASSED!
REG 7/13 74 :((((((((....! I cant believe it!!!! I studied so hard...
REG retake 11/29 -> 89!!!!!!!!!!!!!!!!!!!
BEC 10/11/12 -> 84!!!!!!!!!!!!!
AUD 10/25/12 -> 95!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I'm DONE! OMG 8 months of hard work.

I SHALL PASS. BECAUSE IT'S ME, SO EVERYTHING WILL BE OK!

[Anonymous]

I thought it was a 1000 loss as well … but … i didnt understand the basis even with your explanation … so … I dont think i am really trusted in this 😀 >

[HereGoesNothing]

The basis calculation is as follows:

“Taxpayer purchased 500 shares of Southwestern Energy

Corp for $10/share on 7/15/05. TP sold the 500 shares on

3/2/08 for $7/share. On 3/31/08, the taxpayer purchased

500 shares of southwestern energy for $8/share, sold the

entire lot for $9/share on 10/31/08 and did not

repurchase. Calc 2008 info.”

500 for $10 = 5,000

sold 500 for $ 7 = 3,500

realized loss = 1,500

buy 500 for $8 = 4,000

recomputed basis = 5500*** (4000 + realized loss of 1,500)

sold 500 for $9 = 4,500**

realized loss = 1,000 (4500** basis – 5500*** recomputed basis)

However, Becker says this 1,000 is a gain and not a loss. I am hoping its an error on Beckers part.

I e-mailed Beckers support center to ask them, hopefully they respond soon!

REG (7/2/2012) - 81
BEC (8/29/2012) - 75
FAR
AUD (1/7/2013) - 89

[HereGoesNothing]

i just received an email from Becker the loss is supposed to be 1,000. This is a typo. I feel better now.

REG (7/2/2012) - 81
BEC (8/29/2012) - 75
FAR
AUD (1/7/2013) - 89

[Shay]

@HereGoesNothing are you using 2011ed or 2012ed. I have 2012 and answer is (1000) Gain Recognized and is it question # 18 on SIM 2?

[HereGoesNothing]

I am using 2011…Becker said it was a necessary update that was reflected in the 2012 edition

REG (7/2/2012) - 81
BEC (8/29/2012) - 75
FAR
AUD (1/7/2013) - 89

[Manuelo]

I computed loss by simply doing Proceeds minus basis.

Was it necessary to compute loss by taking the realized loss of 1,500 and subtracting the 500 gain on the sale (4500-4000)…?

[HereGoesNothing]

As far as I see it brings you to the same place becuase I recomputed the basis, adding the realized loss. So in essence, it gives you the same outcome.

REG (7/2/2012) - 81
BEC (8/29/2012) - 75
FAR
AUD (1/7/2013) - 89

[Manuelo]

Then why is the $1000 reported on the tax return? This is a disallowed loss! Meaning it is not allowed to be reported!

[JakeO]

The $1000 dollar loss is allowed on the tax return. The initial $1500 dollar loss is not allowed since they repurchased the same stock within 30 days (either prior or after the sale, in this case after). So, we add the realized, not recognized, loss of $1500 to the cost of the repurchased stock, $4000, to come to our new basis for the stock of at $5500. So when we sold the stock again for $4500, and did not repurchase any within that 61 day window (the day of the sale included), we can realize the $1000 loss.

AUD-Failed (Waiting for Score)
BEC-PASSED (First try)
REG-Failed (Retake February 2013)
FAR-Failed (Retake January 2013)

[Manuelo]

And this $1,000 loss calculated is reported on Schedule D and on Form 1040 Line 13, correct?

[Author]

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