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What is the amount and character of taxable income

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Preston purchases 1,000 shs of BIG Corp on April 1, 20x1 for $2,500. She sells short 1,000 shs of BIG Corp on December 1, 20x1, for $3,750. She closes the short sale on January 15, 20x2, by purchasing & delivering 1,000 shs of BIG Corp for $3,250. She sells the original position on December 15, 20x2 for $3,000.

Problem 1: What is the amount and character of taxable income that Preston must recognize in 20x1?

a. $250 short-term capital loss

b. $1,250 short-term capital loss

c. $750 long-term capital loss

d. $0

Reference no: EM132965157

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