Mr. Cougar owns 1,000 shares of Western Corporation common stock, which it purchased on March 8, 2011, for $12,000. In 2022, Mr. Cougar buys and sells Western Corporation stock as follows. On October 3, Cougar purchases an additional 300 shares fo $3,000. On October 12, he sells the original 1,000 shares acquired in 2011 for $8,500. On November 1, he purchases an additional 500 shares for $4,000. Read the requirements. Requirement a. What is Mr. Cougar's recognized gain or loss as a result of the sale on October 12? Amount Gain or loss Gain or loss to be recognized Requirement b. What are the basis and the holding period of the stock he continues to hold? (Do not round interim calculations. Only round the amount you input in the input field to the nearest dollar.) Basis Holding period begins 300 purchased on October 3, 2022 500 purchased on November 1, 2022 Requirement c. How would your answers to Parts a and b change if the stock Cougar purchases during 2022 is Western nonvoting, nonconvertible, preferred stock instead of Western common stock? Are nonvoting, nonconvertible preferred stock substantially identical to common stock in the same corporation? Under this scenario, would Cougar recognize a gain or a loss? Under this scenario, what is the amount that Cougar would recognize? Complete the table below to show Cougar's basis and the holding period of the stock it continues to hold assuming that the stock held is nonvoting, nonconvertible, preferred stock instead of Western common stock. Holding period begins Basis 300 purchased on October 3, 2022 500 purchased on November 1, 2022
Mr. Cougar owns 1,000 shares of Western Corporation common stock, which it purchased on March 8, 2011, for $12,000. In 2022, Mr. Cougar buys and sells Western Corporation stock as follows. On October 3, Cougar purchases an additional 300 shares fo $3,000. On October 12, he sells the original 1,000 shares acquired in 2011 for $8,500. On November 1, he purchases an additional 500 shares for $4,000. Read the requirements. Requirement a. What is Mr. Cougar's recognized gain or loss as a result of the sale on October 12? Amount Gain or loss Gain or loss to be recognized Requirement b. What are the basis and the holding period of the stock he continues to hold? (Do not round interim calculations. Only round the amount you input in the input field to the nearest dollar.) Basis Holding period begins 300 purchased on October 3, 2022 500 purchased on November 1, 2022 Requirement c. How would your answers to Parts a and b change if the stock Cougar purchases during 2022 is Western nonvoting, nonconvertible, preferred stock instead of Western common stock? Are nonvoting, nonconvertible preferred stock substantially identical to common stock in the same corporation? Under this scenario, would Cougar recognize a gain or a loss? Under this scenario, what is the amount that Cougar would recognize? Complete the table below to show Cougar's basis and the holding period of the stock it continues to hold assuming that the stock held is nonvoting, nonconvertible, preferred stock instead of Western common stock. Holding period begins Basis 300 purchased on October 3, 2022 500 purchased on November 1, 2022
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Mr. Cougar owns 1,000 shares of Western Corporation common stock, which it purchased on March 8, 2011, for $12,000. In 2022, Mr. Cougar buys and sells Western Corporation stock as follows. On October 3, Cougar purchases an additional 300 shares fo
$3,000. On October 12, he sells the original 1,000 shares acquired in 2011 for $8,500. On November 1, he purchases an additional 500 shares for $4,000.
Read the requirements.
Requirement a. What is Mr. Cougar's recognized gain or loss as a result of the sale on October 12?
Amount
Gain or loss
Gain or loss to be recognized
Requirement b. What are the basis and the holding period of the stock he continues to hold? (Do not round interim calculations. Only round the amount you input in the input field to the nearest dollar.)
Basis
Holding period begins
300 purchased on October 3, 2022
500 purchased on November 1, 2022
(
Requirement c. How would your answers to Parts a and b change if the stock Cougar purchases during 2022 is Western nonvoting, nonconvertible, preferred stock instead of Western common stock?
Are nonvoting, nonconvertible preferred stock substantially identical to common stock in the same
corporation?
Under this scenario, would Cougar recognize a gain or a loss?
Under this scenario, what is the amount that Cougar would recognize?
Complete the table below to show Cougar's basis and the holding period of the stock it continues to hold assuming that the stock held is nonvoting, nonconvertible, preferred stock instead of Western common stock.
Basis
Holding period begins
300 purchased on October 3, 2022
500 purchased on November 1, 2022
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