Question

6. P acquired HHH stock at various times and at various prices over the past three years as shown below. P sold 100 shares of HHH stock for $20,000 in 2020, but he cannot identify the particular shares that were sold. How much gain must P report on the sale?

P bought 50 shares of HHH stock in 2014 for $3,000.

In 2016 P bought 100 shares of HHH stock for $5,000

In 2018 P bought 200 shares of HHH stock for $9,000

In 2019 P bought 100 shares of HHH stock for $4,500

Answer 1

We need to apply FIFO method (first in first out) to record the sale of Shares
Sale Details
	No of Shares	Price	Total
	100	$              200	$        20,000
	Total		$        20,000
Purchase Details
Year	No of Shares	Price	Total
2014	50	60	3000
2016	50	50	2500
Total	100		5500
Calulation of Profit
	Sale	$        20,000
	Purchase	$          5,500
	Profit	$        14,500