Homework Answers
Let us first calculate her total gain from this transaction
Gain = Amount of awars - Cost basis = 782,000 - 156,400 = $ 625,600
a. Amount re-invested is $ 547,400
Her recognized gain is the amount NOT reinvested.
Recognized gain = 782,000 - 547,400 = $ 234,600
b. Amount re-invested is $ 860,200
There is no recognized gain since the entire amount was reinvested.
c. Amount re-invested is $ 156,400
Since none of the gain is re-invested, the entire gain of $ 625,600 is her recognized gain.
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