Question

Grayson (single) is in the 24 percent tax rate bracket and has sold the following stocks in 2019: (Loss amounts should be indicated by a minus sign.) Description Date Purchased Basis Stock A 1/23/1995 $ 7,800 Stock B 4/10/2019 15,100 Stock C 8/23/2017 12,125 Stock D 5/19/2009 5,670 Stock E 8/20/20197,685 Date Sold Amount Realized 7/22/2019 $ 4,940 9/13/2019 18,850 10/12/2019 17,170 10/12/2019 13,225 11/14/2019 3,775 a. What is Grayson's net short-term capital gain or loss from these transactions? b. What is Grayson's net long-term gain or loss from these transactions? c. What is Grayson's overall net gain or loss from these transactions? d. What amount of the gain, if any, is subject to the preferential rate for certain capital gains?

Answer 1

А 1 a) 2 3 Description 4 Stock A 5 Stock B 6 Stock C 7 Stock D 8 Stock E 9 Total 10 11 b) 12 Date Purchased 1/23/1995 14/10/2019 08/23/2017 5/19/2009 8/20/2019 Basis(s) Date Sold 7,8007/22/2019 15,100 9/13/2019 12,125 10/12/2019 5,670 10/12/2019 7,685 11/14/2019 Amount Short term Realized capital gain 4,940| 18.850 3,750 17,170 0 13,225 3,775 -3,910 -160 13 Description 14 Stock A 15 Stock B 16 Stock C 17 Stock D 18 Stock E 19 Total 20 21. Date Purchased 1/23/1995 4/10/2019 08/23/2017 5/19/2009 8/20/2019 Basis(s) Date Sold 7,8007/22/2019 15,100 9/13/2019 12,125 10/12/2019 5,670 10/12/2019 7,685 11/14/2019 Amount Short term Realized capital gain 4,940 -2,860 18,850 17,170 5,045 13,225 7,555| 3,7751 9,740

Short term capital gain lo =E5-C5 0 10 =E8-C8 =F8+F5 А B 1 a 2 Date Amount 3 Description Purchased Basis(s) Date Sold Realized 4 Stock A 1/23/1995 17800 17/22/2019 4940 5 Stock B 14/10/2019 4/10/2019 15100 15100 19/1 9/13/2019 18850 6 Stock C 08/23/2017 12125 10/12/2019 17170 7 Stock D 15/19/2009 15670 (10/12/2019 (13225 8 Stock E 18/20/2019 17685 [11/14/2019 13775 9 Total 10 11 b) 12 Date Amount 13 Description Purchased Basis(s) Date Sold Realized 14 Stock A 1/23/1995 7800 7/22/2019 4940 15 Stock B 14/10/2019 4/10/2019 15100 15100 19/1 9/13/2019 18850 16 Stock C 08/23/2017 12125 10/12/2019 17170 | 17 Stock D 5/19/2009 5670 10/12/2019 13225 18 Stock E 8/20/2019 7685 11/14/2019 3775 19 Total 20 Short term capital gain =E14-C14 10 I=E16-C16 =E17-C17 =F14+F16+F17

c) Net capital gain from these transactions - Short term capital gain/loss + Long term capital gain/loss = -$160 + $9740 = $9580 d) Grayson's entire net capital gain of $9580 will be taxed at preferential rate.