TX Tax Law Specialist Practice Questions - Texas Board Certified - Tax Law Exam

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A taxpayer realizes a $20,000 loss on the sale of stock and, 10 days later, repurchases substantially identical stock. What is the federal tax consequence of the loss?

The loss is fully deductible as a capital loss The loss is deductible but only against ordinary income Half the loss is deductible and half is disallowed The loss is disallowed under the wash-sale rule and added to the basis of the new stock

Correct Answer:

The loss is disallowed under the wash-sale rule and added to the basis of the new stock

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