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4. Bernice buys shares of stock in ABC Corporation for $400,000. She sells the stock to...

4. Bernice buys shares of stock in ABC Corporation for $400,000. She sells the stock to her daughter, Henrietta, for $300,000. How much loss did Bernice realize on the sale? How much loss did Bernice recognize? Henrietta sells the stock two years after receiving it. What are Henrietta’s realized and recognized gains/losses if Henrietta sells the stock for $100,000, $250,000 or $600,000? If you were going to submit an argument to Congress to change these rules, what would your best argument be?

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Expert Solution

Bernice

Purchase Price $400000

Sale price           $300000

Loss                     $100000

Recognize Loss $100000

Henrietta

Sale price                           $100000                       $250000              $600000

Purchase Price                   $300000                        $300000             $300000

(Loss) /profit                      ($200000)                    ($ 50000)            $300000

Recognise loss/profit       ($200000)                    ($ 50000)            $300000

ekkarill92 answered 1 year ago
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