Accredited Wealth Management Advisor Practice Exam

What is Marcela's basis in the Appalachian stock after the recent sale and repurchase?

1. $105,000.

2. $155,000.

3. $160,000.

4. $195,000.

The correct answer is: $195,000.

To determine Marcela's basis in the Appalachian stock after the recent sale and repurchase, it is essential to understand how basis is calculated following a stock sale and subsequently repurchasing the same stock. When an investor sells stock, their basis in that stock is typically the original purchase price plus any adjustments. However, when that stock is repurchased after a sale, particularly with respect to wash sale rules, the basis may be adjusted. Under the wash sale rule, if Marcela sells a stock at a loss and buys it back within 30 days, the disallowed loss is added to the cost of the repurchased stock, ultimately increasing her basis. If the context of the question provided indicates Marcela initially sold the stock for a certain amount and then repurchased it, her new basis would factor in the price she paid for the repurchase as well as any adjustments required by the wash sale rules. To arrive at the correct basis of $195,000, it suggests that Marcela likely repurchased the stock for a higher amount post-sale, leading to an increased basis that reflects this new investment. Therefore, her basis in the Appalachian stock is the repurchase price reflecting any applicable adjustments from the previous transaction. This understanding is key to