Evaluate calculation of adjusted basis for rose stock

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On May 5, 2008, Nancy sells her stock (adjusted basis of$13,000) in Lime, Inc., a publicly traded company, for $17,000. OnMay 31, 2008, she pays $20,000 for stock in Rose, Inc., aspecialized small business investment company. Nancy believes thather adjusted basis for the basis for the Rose stock is $10,000.

a. Evaluate Nancy's calculation of the adjusted basis forher Rose stock.

b. How would your answer change if Nancy purchased thereplacement stock on July 15 rather than on May 31?

Reference no: EM13258455

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