Question

Sam buys 500 shares fo XYZ, Inc. for $10,000. On December 15, 2020. he sells all of these shares for $7,000 (a $3,000 loss).  On January 10, 2021, he buys another 500 shares of identical XYZ stock for $8,000.  What is Sam's basis in the XYZ stock purchased on January 10, 2021?

Answer 1

Buying a Stock Investment: Buying a stock investment occurs when an investor acquires ownership of a company's shares. The investor's purchase price is referred to as the cost basis. The plan is to make money by selling the shares at a higher price. A buy order directs a stockbroker to acquire a security.

 

Sam's basis = Purchase Value of stock + Previous Loss

                      = $ 8000 + $ 3000

                     = $11000

 

Sam's basis in XYZ company = $ 11000.

Sam's basis in XYZ company = $ 11000.