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An investor purchased 100 shares of Paradigm Publishing Corporation (PPC) on October 17, 2020. The price was $83 per share. On April 11, 2021, the investor wrote one PPC Nov 85 call for 3. At expiration date, the PPC stock is selling for $80 per share, and the investor liquidates the stock at the market price and the option at its intrinsic value. The net tax consequences are A) $300 long-term loss. B) $300 long-term gain. C) no gain, no loss. D) $200 short-term gain.

Respuesta :

abiolataiwo2015

Based on the information given the net tax consequences are: C) no gain, no loss.

First step is to compute the breakeven point

Breakeven point=Purchase price-premium received

Breakeven point=$83-[($83-$80)]

Breakeven point=$83-$3

Breakeven point=$80

Based on the given details  we were told that the PPC stock is selling for $80 per share and based on the above calculation the breakeven point was also $80.

Therefore the tax consequences is no gain or no loss because PPC stock was sold out at the breakeven point.

Learn more here:

https://brainly.com/question/15323617

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