Question

Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2018, for $300,000. On December 12, 2018, Kevin purchases an additional 750 shares of Bluebird stock for $210,000. According to market quotations, Bluebird stock is selling for $285 per share on 12/31/18. Kevin sells 500 shares of Bluebird stock on March 1, 2019, for $162,500. What is the adjusted basis of Kevin?

Answer 1

Answer and Explanation:

Purchases:

1,000 shares * $300 per share = $300,000

750 shares * $280 per share = $210,000

a. 300,000 + 210,000 = 510,000

answer: $510,000

b.

162,500 - 500*280 = $22,500

answer: $22,500

c.

if he cannot identify the shares sold, then they are sold on a first in first out basis. So they would be from the shares bough October 3.

162,500 - 500*300 = $12,500

answer: $12,500