Question

T purchased the following lots of ZYX Corporation stock: 25 Shares Purchased 4/30/2013 Cost $1,800 40 Shares Purchased 5/20/2013 Cost $3,000 25 Shares Purchased 9/21/2013 Cost $2,000 T sold 70 shares in December, 2017, for $6,300, but was unable to identify specific shares to be sold by certificate number and date of purchase. What was T’s adjusted basis in the shares sold? a. $5,200 b. $5,250 c. $5,360 d. $6,300

Answer 1

To calculate the adjusted basis of shares sold we need to follow FIFO method (First in First out) i.e. shares which were purchased first are assumed to be sold first.

Therefore the adjusted basis of shares sold will be

Date of Purchase	Shares Purchased	Cost of Purchase	shares sold out of the lot	Adjusted Basis
4/30/2013	25	$1,800	25	=$1,800/25*25=$1,800
5/20/2013	40	$3,000	40	=$3,000/40*40=$3,000
9/21/2013	25	$2,000	5	=$2,000/25*5=$400
	90		70	$5,200

T’s adjusted basis in the shares sold = $5,200 (a)