The amount of gain for Brady's basis stock was $38,600 is $0 capital gain, and for Brady's basis stock was $9,500 is $23,500 long term capital gain, and for Brady's basis was $0 is $33,000 long term capital gain.
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How to calculate gain in stock?</h3>
Gain or capital gain in stock have two type, short-term and long-term. Short term capital gain is gain from capital for periods of less than 1 year or 12 months. Long term capital gain is gain from capital for periods of more than 1 year or 12 months.
Brady have stock in Marple Corp. for three years, so it will be long term capital gain.
Capital gain can be calculated by this formula,
Capital gain = cash distributed - Basis stock
For basis stock was $38,600
Capital gain = $33,000 - $38,600
Capital gain = -$5,600
Since, the capital gain result in negative this indicate no capital gain for Brady and Brady's stock basis reduced from $38,600 to $5,600. So, Brady recognized $0 capital gain.
For basis stock was $9,500
Capital gain = $33,000 - $9,500
Capital gain = $23,500
This indicate the Brady's stock basis reduced to $0 and Brady recognized $23,500 long term capital gain.
For basis stock was $0
Capital gain = $33,000 - $0
Capital gain = $33,000
This indicate the Brady's stock basis would remain at $0 and Brady recognized $33,000 long term capital gain.
Thus, Brady's amount and character of capital gain is $0 capital gain at basis stock $38,600, and $23,500 long term capital gain at basis stock $9,500, and $33,000 long term capital gain at basis stock $0.
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