The cost basis of the customer in the stock of XYZ is equivalent to the acquisition cost of shares, that is, $5,400, and is not affected by the short-term capital gain or loss.
A capital gain is considered to be a shorter-term when the asset holds for a period of less than one year. When the holding period extends by one year, then the same capital gain is treated as a long-term capital gain.
The cost basis of the customer in XYZ's stock is $5,400 which is determined by taking the product of 100 shares at a price of $54 per share. It will not be affected by the short-term capital loss of $1,300, which is computed as the difference between sales cost of $4,100 and purchase cost of $5,400 respectively. As a result, the cost basis should be the same as the cost of purchasing the shares.
Therefore, the customer's cost basis is $5,400 in the stock of XYZ company.
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