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Answer :
Adrian incurred a capital loss of $5,800 on the sale of 580 shares of X Corp. The loss can be used to offset capital gains or deducted against other taxable income, subject to certain limitations.
To calculate the gain or loss on the sale of the shares, we need to compare the selling price with the original purchase price.
The original purchase price of the 580 shares was $59,740, and the selling price was $53,940.
To determine the amount of gain or loss, we subtract the selling price from the purchase price:
Gain/Loss = Selling Price - Purchase Price
Gain/Loss = $53,940 - $59,740
Gain/Loss = -$5,800
In this case, there is a loss of $5,800 on the sale of the shares.
Regarding the character of the gain or loss, since the selling price is lower than the purchase price, it is a capital loss.
The effect on Adrian's taxes this year will depend on whether the loss can be used to offset any capital gains or if it can be deducted against other taxable income.
If Adrian has capital gains from other investments in the same year, he can use the capital loss to offset those gains, which may result in a lower tax liability. If he doesn't have any capital gains, he can use the capital loss to offset up to $3,000 of other taxable income. Any remaining loss can be carried forward to future years to offset future capital gains or taxable income.
Learn more about capital loss here:
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