Question

John bought 1000 shares of Intel stock on October 18, 2014, for $30 per share plus a $750 commission he paid his broker. On December 12, 2018, he sells the shares for $42.50 per share. He also incurs a $1000 fee for this transaction. a.) What is John's adjusted basis in the 1000 shares of Intel stock? b.) What amount does John realize when he sells the 1000 shares? c.) What is the gain/loss for John on the sale of his Intel stock? What is the character of the gain/loss?

Answer 1

Answer a)	What is John's adjusted basis in the 1000 shares of Intel stock?
	John's adjusted basis = Purchase price + Commission paid to broker
			=1000*30+750
			$      30,750
Answer b)	What amount does John realize when he sells the 1000 shares
	John will realize amount of sales proceed less transaction fees
			=1000*42.5-1000
			41500
Answer c)	What is the gain/loss for John on the sale of his Intel stock
	Gain = amount realized - adjusted basis
			=41500-30750
			$      10,750
	What is the character of the gain/loss?
	This gain is long term capital gain in nature as stock is being hold for more than 12 month.