question archive John bought 1,500 shares of Intel stock on October 18, 2015, for $40 per share plus a $750 commission he paid to his broker
Subject:AccountingPrice:5.89 Bought3
John bought 1,500 shares of Intel stock on October 18, 2015, for $40 per share plus a $750 commission he paid to his broker. On December 12, 2019, he sells the shares for $57.50 per share. He also incurs a $1,000 fee for this transaction.
a. What is John's adjusted basis in the 1,500 shares of Intel stock?
b. What amount does John realize when he sells the 1,500 shares?
c-1. What is the gain/loss for John on the sale of his Intel stock?
Answer a: John Adjusted basis will be $60750
Working : John adjusted basis = (No of share purchased x per share purchase price) + Commission paid on purchase
= (1,500 shares x $40 per share) + $750
= $60,000 + $750 = $60,750 or ($60,750 / 1500 = $40.50 per share)
Answer b: John realize $85,250 on selling the 1,500 shares.
Working : Amount Realised on Sales = (No of Share sold x per share sale price) - fees paid
= (1,500 shares x $57.50 per share) - $1,000
= $86,250 - $1000 = $85,250 or ( $85,250 / 1500 = 56.83 per share)
Answer c: John made Gain on sale of intel stock : 24,500
Working : Net Sale Price (answer a) - Acquisition Price (answer b)= $24,500 ($85,250 - $60,750) or 1500 share (56.833333 - 40.50)