Question

Grayson (single) is in the 24 percent tax rate bracket and has sold the following stocks in 2020: (Loss amounts should be indicated by a minus sign.)

Description	Date Purchased	Basis		Date Sold	Amount Realized
Stock A	1/23/1996	$	8,000	7/22/2020	$	5,100
Stock B	4/10/2020		15,500	9/13/2020		19,330
Stock C	8/23/2018		12,625	10/12/2020		17,850
Stock D	5/19/2010		5,830	10/12/2020		13,525
Stock E	8/20/2020		7,825	11/14/2020		3,875

Problem 7-46 Part-a (Algo)

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?

      

      

Answer 1

a)

Stock	Holding Period	Amount Realized	Basis	Gain (Loss)
Stock B	Short-term	$             19,330.00	$ 15,500.00	$    3,830.00
Stock E	Short-term	$               3,875.00	$    7,825.00	$ (3,950.00)
		Net Short -Term Capital Loss		$ (120.00)

b)

Stock	Holding Period	Amount Realized	Basis	Gain (Loss)
Stock A	Long-term	$               5,100.00	$    8,000.00	$ (2,900.00)
Stock C	Long-term	$             17,850.00	$ 12,625.00	$    5,225.00
Stock D	Long-term	$             13,525.00	$    5,830.00	$    7,695.00
		Net Long- Term Capital Gain		$    10,020.00

c)

Short Term Capital Loss	$ (120.00)
Long Term Capital Gain	$    10,020.00
Net Capital Gain	$    9,900.00

d) Entire net capital gain of $9,900 will be taxed at the preferential rate.