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What is the amount and character of taxable income

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Reference no: EM132965219

A taxpayer reported the following information in years 20x1 and 20x2:

6/15/x1: buy a put option on 50 shs of BIG Corp for $1,500
12/1/x1: buy a call option on 50 shs of BIG Corp for $1,250
12/15/x1: sell the put option for $1,300
12/31/x1: the call option has a fair market value of $1,275
6/30/x2: sell the call option for $1,400

Problem 1: What is the amount and character of taxable income/loss recognized in 20x1?

a. $175 short-term capital loss

b. $175 short-term capital loss and $25 short-term capital gain

c. $200 short-term capital loss

d. $225 short -term capital loss

Reference no: EM132965219

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