Question

T purchased the following lots of stock in Z Corporation: 50 shares 1/12/2008 Cost $1,200 100 shares 2/28/2013 Cost $3,000 75 shares 10/16/2014 Cost $2,500 T sold 75 shares on January 16, 2017 for $2,800. His only instruction to his broker, who actually held the shares for T, was to sell 75 shares. a. How much gain or loss does T recognize on this sale? b. How could this result be altered?

Answer 1

We will follow FIFO system hence cost of sale of stock is
Date	shares	amt	Total amt
1/12/2008	50	24	$1,200
2/28/2013	100	30	$3,000
10/16/2014	75	33.33	2500
Sales of 75 shares for	$2,800
Less: Cost of shares	1950
1200+(25*30)
Gain on sale of stock	$850	ans a
Anb b If we use LIFO than answer would be different
Sales of 75 shares for	$2,800
Less: Cost of shares	2500
Gain on sale of stock	$300	ans a
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