Question

Stock 1 Veggie Mart-

On November 11, 2016, Maria purchased 25 shares of Veggie Mart stock for $350.

Maria sold 10 shares of the Veggie Mart stock on August 31, 2017. The stock was sold for $12.50 per share.

Stock 2 Coco Cereal-

Maria also inherited 30 shares of Coco Cereal stock from her uncle on April 30, 2017. The stock’s value on the day her uncle’s died was $18 per share.

Maria decided to sell all 30 shares of stock on December 17, 2017. The Coco Cereal stock sold for $21 per share.

a)    What is the basis for the shares Coco Cereal stock sold on December 17, 2017?

b)    What is the nature of the gain or loss from the sale of Stock 2?

a)    Long term

b)    Short term

c)    If a taxpayer has allowable expenses/deductions that exceed their standard deduction they should itemize.

a) True

b) False

Answer 1

a) Inherent share are transferred after the death of original share holder which is his uncle but on the death of his uncle the per share have $18 value and on December 17 , per share value is $21 which more than the $18 and she also want to recover his loss from stock 1, that why he sales out the shares.

b) Any gain/loss which you aquire from the asset which you held for less than one year is short term gain/loss and for more than one year it is long term capital gain/ loss.

Maria received revecire share on 30, April and sell in December so it is short term capital gain.

c) Standard deduction is the amount which is allowed to deduct from taxable income. Itemized include such expenses which is not otherwise deductable. Itemize should only be used if actually expenses exceed standard deduction otherwise they have to pay more taxes.

You it is True.