Margaret anticipated a drop in the price of XYZ stock. She owned 100 shares of XYZ and had a basis of $22,000 in those shares. She had purchased those shares in 2015. On April 7, 2022, she borrowed 100 XYZ shares from her broker and sold the borrowed shares short for $20,000, anticipating that the stock price would drop. Unfortunately, she had guessed wrong; the value of the stock went up, so she purchased XYZ shares for $21,000 to close the transaction on April 30, 2022 and returned those recently -purchased shares to her broker. a. What is the amount and character (long-term, short-term) of her loss? b. What is the amount and character (long-term, short-term) of her loss if she used the 100 shares she owned earlier to close the transaction?

Answer rating: 100% (QA)

Lets break down Margarets situation a Using Borrowed Shares Margaret borrowed 100 shares of XYZ stoc... View the full answer