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defon
3 years ago
10

Over the past 20 years, Alfred has purchased 380 shares of Green, Inc., common stock. His first purchase was in 1996 when he acq

uired 30 shares for $20 a share. In 2003, Alfred bought 150 shares at $10 a share. In 2018, Alfred acquired 200 shares at $50 a share. He intends to sell 125 shares at $60 per share in the current year (2019). If Alfred's objective is to minimize gain and assuming he can adequately identify the shares to be sold, what is his recognized gain
Business
1 answer:
pishuonlain [190]3 years ago
3 0

Answer:

The correct answer is $1,250.

Explanation:

According to the scenario, the computation of the given data are as follows:

If he wants to minimize the gain So, he will sell the 125 share out of 200 share which he has bought in 2018 at $50.

So, Amount Realized after sell at $60 = 125 × $60 = $7,500

Adjusted basis from 2018 = 125 × $50 = $6,250

So, We can calculate the recognized gain by using following formula:

Recognized gain = Amount Realized - Adjusted basis

= $7,500 - $6,250

= $1,250

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