Question

Dahlia is in the 32 percent tax rate bracket and has purchased the following shares of Microsoft common stock over the years:

Date Purchased	Shares	Basis
7/10/2009	400	$	12,000
4/20/2010	300		10,750
1/29/2011	500		12,230
11/02/2013	250		7,300

If Dahlia sells 800 shares of Microsoft for $40,000 on December 20, 2019, what is her capital gain or loss in each of the following assumptions? (Do not round intermediate calculations.)

a. She uses the FIFO method.

Capital Gain or Capital loss

__________

Answer 1

Date purchased   Shares   Basis  
7/10/2009 400 12,000   
4/20/2010 300 10,750   
1/29/2011 500   12,230
11/02/2013 250 7,300
Under FIFO Method          
800 shares has been sold means the below shares has been sold
7/10/2009 400 12,000
4/20/2010 300   10,750
1/29/2011 100 2,446 (12,230/500)*100
(800-400-300)          
Total adjusted basis 800 25,196
Capital gain = (40,000-25,196) = $14,804