Question
In: Accounting
On January 1, Year 1, Taxpayer (“T”) purchased both a bond and stock of Corporation X....
- On January 1, Year 1, Taxpayer (“T”) purchased both a bond and stock of Corporation X. The bond was purchased for $10,000, had a face value of $10,000 and paid 10% interest ($1,000) on December 31 of each year. The stock was purchased for $10,000 and paid a dividend of $1,000 on December 31, ex- dividend date December 15. T sold both the X stock and the X bond on July 1, of Year The bond sold for $10,300 and the stock sold for $11,000. What income, gain or loss, including character type (e.g. capital gain, interest, dividend, ordinary) will T recognize as a result of the sales?
__________________________________ BOND
__________________________________ STOCK
Solutions
Expert Solution
| Answer: |
| Income from Bond: |
|
Capital Gain on Bond = Sale value of
Bond ( -) Purchase value of Bond = $10,300 (-) $10,000 = $300 |
| Capital Gain on Bond = $300 |
| Income from Stock : |
|
Capital Gain on
Stock = Sale value of Stock ( -) Purchase value
of Stock = $ 11,000 - $ 10,000 = $1,000 |
| Capital Gain on Stock = $1,000 |
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