Question

Five years​ ago, Grady and his brother Matt formed Garnett Corp., a golf apparel manufacturing corporation. At that​ time, Grady contributed $375,000 to the corporation in exchange for 70​% of its stock. During the current​ year, Grady needed some cash to purchase a golf course so he sold a third of his interest in Garnett Corp. for $84,000.He also sold stock in the following companies for the amounts​ indicated:

Corporation	Sales Proceeds	Adjusted Basis	When Acquired
IBM	$19,000	$12,000	52 months ago
Microsoft	32,000	43,000	18 months ago
Tidal Radio	38,000	13,000	7 months ago
Wavetable	23,000	32,000	4 months ago

During the year Grady hired a collection agency to collect a $16,000 loan he made to an old​ friend, which was due in full on January 1 of the current year. The agency found no trace of his friend. Also during the​ year, DEF ​Corporation, in which he owns​ stock, went bankrupt. His investment was worth $92,000 on January​ 1, he purchased it six years ago for $109,000​, and he expects to receive only $15,000 in redemption of his stock.​ Finally, Grady's salary for the year was $124,000 for his work as an associate professor.

Begin by entering the​ short-term gains or​ losses, then the​ long-term gains or​ losses, and finally the ordinary gains or losses.

Answer 1

Solution:
Description		Amount($)	Amount($)
A.	Short term gains or losses:
	Wavetable (23,000 - 32,000)	-9000
	Tidal Radio (38,000 - 13,000)	25000
	Net Short term gains or losses		16000
B.	Long term gains or losses:
	Sale of interest in Garnett Corp. [84,000 - (375,000/3)]	-41000
	IBM (19,000 - 12,000)	7000
	Microsoft (32,000 - 43,000)	-11000
	DEF (15,000 - 109,000)	-94000
	Net Long term gains or losses		-139000
C.	Ordinary gains or losses
	Unrecovered loan from friend		-16000
D.	Salary income		124,000
In this problem, there are not specified any requirment whether to calculate net income after setting off losses or calculate tax. So we have not calculated net taxable income or income taxes.