Question

(The following information applies to the questions displayed below.) George bought the following amounts of Stock A over the years: (Loss amounts should be indicated with a minus sign.) Stock Stock Stock A Date Number of Purchased Shares 11/21/1993 1,070 3/18/1999 535 5/22/2008 820 Adjusted Basis $ 25, 680 9,630 29,520 On October 12, 2019, he sold 1,305 of his shares of Stock A for $38 per share. a. How much gain/loss will George have to recognize if he uses the FIFO method of accounting for the shares sold? Gain or loss to be recognized

Answer 1

Required a:

Sales value (1,305 * $38)	$49,590
(-) Total adjusted basis of shares sold	($29,910)
Gain or loss to be recognized	$19,680

Working:

Shares sold from 3/18/1999 (1,305-1,070)	235
Basis of shares sold from 11/21/1993	$25,680
Basis of shares sold from 3/18/1999 - (9,630 / 535) * 235	$4,230
Total adjusted basis of shares	$29,910

Required b:

Cost of 820 shares	$29,520
Cost of 485 shares (25,680 / 1,070)*485	$11,640
Adjusted basis of stock	$41,160
Sale value (1,305 * $38)	$49,590
(-) Adjusted basis of stock	($41,160)
Gain or loss to be recognized	$8,430