Question

Kurt; a single, cash basis, calendar year taxpayer; had the following transactions during 2018: On February 1, 2018, he purchased Apple stock for $100,000. He sold the stock on August 31, 2018, for $75,000. On March 1, 2016, he purchased a collection of silver coins for $250,000. On February 28, 2018, he sold the collection for $280,000. On November 1, 2015, he purchased Amoco stock for $600,000. He sold the stock on October 31, 2018 for $650,000. On June 17, 2014, he loaned his cousin $10,000 to remodel his house for a handicapped spouse. The cousin signed a loan agreement that required payments of $150 per month and 4% interest. On March 23, 2018, the cousin filed Chapter 7 bankruptcy that entitled Kurt to no future payments on the remaining $2,500 balance of the debt. On June 1, 2016, he purchased $250,000 of preferred stock directly from Badass Texas Trucks Inc. At the time he purchased the stock, the company had $825,000 of paid-in capital. On June 30, 2018, he sold the stock for $190,000. After the netting process, what is the character of any gains and losses that will be included on his 2018 tax return?

Answer 1

Gain / Loss on Capital asset held for 12 month or less is classified as Short term Capital Gain / Loss. Rest of the asset's gain /loss is Long Term Gain/Loss.

	Purchase Date	Purchase Price	Sale Date	Sale Price	Gain /Loss	Short Term Gain/(Loss)	Long Term Gain/(Loss)
Apple Stock	1-Feb-18	100,000	31-Aug-18	75,000	(25,000)	(25,000)
Silver Coins	1-Mar-16	250,000	28-Feb-18	280,000	30,000		30,000
Amoco Stocks	1-Nov-15	600,000	31-Oct-18	650,000	50,000		50,000
Loan to Cousin	17-Jun-14	2,500	23-Mar-18		(2,500)	(2,500)
Baddas Texas Preferred Stock	1-Jun-16	250,000	30-Jun-18	190,000	(60,000)		(60,000)
						(27,500)	20,000
					Net Loss	(7,500)

Long Term Gain loss is first offset against Long Term Gain and short term loss is first offset against short term gain. remaining net gain / loss is offset against other nature gain / loss.