On June 1, 2019, Brady purchased an option to buy 1,000 shares of General, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Brady decided to let the option lapse as of December 1, 2019. On his 2019 tax return, what should Brady report?

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Business

Deandre Vargas

20 May, 20:49

On June 1, 2019, Brady purchased an option to buy 1,000 shares of General, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Brady decided to let the option lapse as of December 1, 2019. On his 2019 tax return, what should Brady report?

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Dominic Sloan · Answer 1

Brady should report a short term capital loss of $3,000.

Explanation:

Short term capital losses are financial losses resulting from the sale of an asset that you have held for less than a year. If the loss results from the sale of an asset that was held for more than a year it is considered a long term capital loss.