Question

Problem 13-53 (Algorithmic) (LO. 1, 2, 3) Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2019, for $175,000. On December 12, 2019, Kevin purchases an additional 750 shares of Bluebird stock for $122,500. According to market quotations, Bluebird stock is selling for $175 per share on 12/31/19. Kevin sells 500 shares of Bluebird stock on March 1, 2020, for $98,000. a. The adjusted basis of Kevin's Bluebird stock on December 31, 2019, is $ b. What is Kevin's recognized gain or loss from the sale of Bluebird stock on March 1, 2020, assuming the shares sold are from the shares purchased on December 12, 2019? In your computations, round the per share amount to the nearest whole dollar and use the rounded amount in subsequent computations. Kevin's recognized is s c. What is Kevin's recognized gain or loss from the sale of Bluebird stock on March 1, 2020, assuming Kevin cannot adequately identify the shares sold? Kevin has a recognized

Answer 1

Answer :

1000 shares * 175 = $175000

750 shares * 163.3 = $122500

(a) $175000 + $122500

= $297500

(b)

Amount realized	$98000
Less Adjusted basis (500 shares *163.3)	$81650
Recognized gain	$16352

(c) If Kevin cannot adequately identify the shares sold, a FIFO basis, so they would be form the shares brought on October 3.2019.

Amount realized	$98000
Less Adjusted basis (500 shares*175)	$87500
Recognized gain	$10500

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