Melonie purchased 100 shares of Wake Corporation stock for $6 per share on August 3, 2017. On December 18, 2018, Melonie sells all 100 shares for $4 per share. On January 5, 2019, Melonie purchases 50 shares of Wake stock for $5 per share. What is the basis of the 50 shares Melonie holds on January 5, 2019?

a.$50

b. - 0 -

c.$650

d.$250 e.$350

The answer is option (a) = $50

Explanation:

Basis of the 50 shares Melonie purchased can be described as its value;

Value of shares purchased on August 3, 2017 = (value per share*number of shares)

August 3, 2017 value = (6*100) = $600

Value of shares sold on December 18, 2018 = (100*4) = $400

Balance of shares=0

Value balance after sale = (400-600) = -200, she went on a loss of $200

January 5, 2019 purchase 50 shares at 5 dollars each

Total value = (50*5) = 250

Total value she has by January 5, 2019=250 + (-200) = 50

Basis of the 50 shares she has=$50