(1) Ans: Option ( E) None of these
Explanation:
To qualify for section 1244 stock must be purchased from corporation. this stock is not section 1244 as it is not purchased from corporation.
STCL ( 1000 share × $120) | ($120000) | |
Amount Realized ( 3000 share ×$30) | $90,000 | |
Less: Basis | ($24000) | |
Long term capital gain | $66000 | |
Net short term capital gain | ($54000) |
Explanation:
1)Amount realized per share:
$ 120000 ÷ 4000
= $ 30 per share
2) purchase price per unit of 1000 share purchased from friend:
$ 150,000 ÷ 1000 share
= $150 per share
3) short term loss:
= ( $150 - $30) * 1000
= $ 120,000
4) if stock is held for more than 12 months it is considered as long term capital asset, and when sold amount that would be realised would be referred to capital gain or loss.
5) 3000 stock was purchased on july 20,2018 and was sold ôn sep. 15 2019 i.e more than 12 months , hence it is a long term asset
6) 1000 stock from friend were purchased on Nov.2018 and sold on sep 2019 i.e less than 12 months , hence it is a short term asset.
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