11. Your 2018 federal gross income (W2 wages, capital gains, and dividends) would be closest to:
a. $203,736 b. $203,825 c. $203,936 d. $203,950 e. $207,450
Answer:
Correct answer is:
d. $203,950
Explanation:
2018 federal gross income (W2 wages, capital gains, and dividends):
1. W2 wages:
W2 wages = $200,000
2. Dividends:
Cash Dividend of $2 per share were received on July 1, 2018 for 100 shares owned = 100 * $2 = $200
3. Capital gains:
During 2018, the only sale transaction is on Dec 2 of 50 shares at $100 per share = $5000
Cost basis of shares:
100 shares were purchased on Jan 1, 2018 at $50 per share.
On Dec 1, 2018, there was 2: 1 stock split
Hence cost basis = 100 * $50 / (100 * 2) = $25
Hence, Short term capital gain = Sales value - cost basis = 50 * $100 - 50 * $25 = $3,750
2018 federal gross income (W2 wages, capital gains, and dividend = $200,000 + $3,750 + $200 = $203,950
Hence option d is correct and options a, b and c are incorrect.
11. Your 2018 federal gross income (W2 wages, capital gains, and dividends) would be closest to:...
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