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 7/10/2010 570 $ 26,790 4/20/2011 470 24,816 1/29/2012 670 27,202 11/02/2014 420 19,404 If Dahlia sells 1,310 shares of Microsoft for $87,770 on December 20, 2020, what is her capital gain or loss in each of the following assumptions? (Do not round intermediate calculations.) a. She uses the FIFO method.

Answer 1

a. She uses the FIFO method :-

Date Purchased	Shares	Basis
7/10/2010	570	26,790
4/20/2011	470	24,816
1/29/2012	670	27,202
11/02/2014	420	19,404

Under FIFO Method

1,310 shares has been sold means the below shares has been sold

Particulars	Shares	Amount
7/10/2010	570	26,790
4/20/2011	470	24,816
1/29/2012 (1,310-570-470)	270	10,962 (27,202*270/670)
Total adjusted basis		62,568

Capital gain = (87,770 - 62,568) = $ 25,202

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answered by: anonymous