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Grayson (single) is in the 24 percent tax rate bracket and has sold the following stocks...

Grayson (single) is in the 24 percent tax rate bracket and has sold the following stocks in 2019: (Loss amounts should be indicated by a minus sign.)

Description Date Purchased Basis Date Sold Amount Realized
Stock A 1/23/1995 $ 7,950 7/22/2019 $ 5,060
Stock B 4/10/2019 15,400 9/13/2019 19,210
Stock C 8/23/2017 12,500 10/12/2019 17,680
Stock D 5/19/2009 5,790 10/12/2019 13,450
Stock E 8/20/2019 7,790 11/14/2019 3,850

a. What is Grayson’s net short-term capital gain or loss from these transactions?

b. What is Grayson’s net long-term gain or loss from these transactions?

c. What is Grayson’s overall net gain or loss from these transactions?

d. What amount of the gain, if any, is subject to the preferential rate for certain capital gains

Solutions

Expert Solution

Solution:

a) Net short term capital gain or loss from these transactions:

Description Date purchase Basis Date sold Amount realized Short term capital gain
Stock A 1/23/1995 $7,950 7/22/2019 $5,060 $0
Stock B 4/10/2019 $15,400 9/13/2019 $19,210 $3,810
Stock C 8/23/2017 $12,500 10/12/2019 $17,680 $0
Stock D 5/19/2009 $5,790 10/12/2019 $13,450 $0
Stock E 8/20/2019 $7,790 11/14/2019 $3,850 ($3,940)
Total ($130)

b) Net long term capital gain or loss from these transactions:

Description Date purchase Basis Date sold Amount realized Long term capital gain
Stock A 1/23/1995 $7,950 7/22/2019 $5,060 ($2,890)
Stock B 4/10/2019 $15,400 9/13/2019 $19,210 $0
Stock C 8/23/2017 $12,500 10/12/2019 $17,680 $5,180
Stock D 5/19/2009 $5,790 10/12/2019 $13,450 $7,660
Stock E 8/20/2019 $7,790 11/14/2019 $3,850 $0
Total $9,950

c)

Net capital gain from these transactions = Short term capital gain/loss + Long term capital gain/loss

=($130) +$9,950

=$9,820

d)

Grayson's entire net capital gain of $9,820 will be taxed at preferential rate.

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ekkarill92 answered 1 year ago
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