Question

Harry bought 1 share of ABC Corp. for $500/share on January 1, 2015; Harry paid $10 in acquisition costs to acquire the stock. On January 1, 2016, Harry bought 1 share of ABC Corp. for $1000/share; Harry paid $20 in acquisition costs to acquire the stock. On January 1, 2017, Harry bought 1 share of ABC Corp. for $1500/share; Harry paid $30 in acquisition costs to acquire the stock. On January 1, 2019, Harry sold 1 share of ABC Corp. for $1000/share. Harry paid $25 in selling expenses. What is Harry’s realized gain or loss on the sale of the 1 share of ABC Corp. if Harry uses the default method to identify which shares were sold?

Answer 1

Default method to identify which shares are sold is FIFO method, based on the same calculation of realised gain or loss on the sale is 1 share is as follows,

Net consideration (1000 - 25) = 975

Less:

Cost of aquisition (January 1 2015) = 500

Expenses for aquisition = 10

Realised gain/(loss) = 415.