On July 1, 2017, Lilly paid $90,000 for 450 shares of Jennifer Corp common stock. Lilly...
- On July 1, 2017, Lilly paid $90,000 for 450 shares of Jennifer Corp common stock. Lilly received a nontaxable stock dividend of 50 new common shares on December 15, 2019. On December 20, 2019, Lilly sold the 50 new shares for $11,000. How much should Lilly report in her 2019 return as Long Term Capital Gain?
- $0
- $1,000
- $2,000
- $11,000
Homework Answers
Solution:
Calculation of long term capital gain = sales - cost
sales of 50 share is 11,000
Cost of each share = 90,000 / 450
=200
cost of 50 shares = 50*200
=10,000
Calculation of long term capital gain = sales - cost
= 11,000 - 10,000
=1,000
Option B)$1,000 is correct
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