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).        How much did Maria sell the 30 shares of Coco Cereal stock for (proceeds)?

630

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

c) What is the basis for the 10 shares of Veggie Mart- stock sold on August 31?

d )What is the gain or loss from the sale of stock 1 ?

Answer 1

Solution (a) Proceeds from sales of Coco Cereal stock is $630 (30 shares @ $21 per share)

Solution (b) Basis of inherited shares is the fair market value of shares on the valuation date i.e. the date of death of original shareholder. Therefore, the basis of Coco General shares is $18 per share.

Solution (c) Basis for Veggie Mart-stock is the purchase price. Therefore, the basis for such 10 shares of Veggie Mart-stock is $14 per share ($350 for 25 shares)

Solution (d) Loss on the sale of stock-1 i.e. 10 shares of Veggie Mart-stock is $15 (loss of $1.5 per share). Sales price is $12.5 per share and purchase price is $14 per share.