Question

Barbara sold three assets during 2017. How much and what kind of gain or loss does she recognize from each sale? What tax rate applies to the net gain if Barbara's ordinary income is taxed at 25 percent?

a. On February 25 she sold 200 shares of XYZ stock for $19,000. She bought that stock for $16,000 on February 23, 2016.

b. On July 20 she sold an antique automobile for $30,000 that she purchased for $31,000 on July 21, 2016.

c. On August 2, she sold qualified small business stock for $28,000 that she had purchased for $20,000 on December 19, 2008.

Answer 1

		$
a	Sale value of 200 shares on February 25, 2017	19,000
	Less: Cost of acquisition of shares on February 23,2016	(16,000)
	Long-term capital gain	3,000
	Shares are sold after holding a period more than one year. Hence , gain araised from the sale of shares are long-term gain.
b	Sale value of antique automobile on July 20,2017	30,000
	Less: Cost of acquisition on July 21,2016	(31,000)
	Short-term capital loss	(1,000)
c	Sale value of small business on August 2, 2017	28,000
	Less : Cost of purchase on December 19,2008	(20,000)
	Long-term capital gain	8,000
	Gain araised from the sale of business which was held by the owner for a long period of time is treated as long-term capital gain.