In January, 20XX a customer buys 100 shares of ABC stock at $50 per share and pays a $2 commission per share. The customer recei

Question

3 years ago

9

In January, 20XX a customer buys 100 shares of ABC stock at $50 per share and pays a $2 commission per share. The customer recei

ves $2 in cash dividends during the year. The customer's cost basis in the stock is:________. A. $48 per share B. $50 per share C. $52 per share D. $54 per share

Business

1 answer:

leva [86] · Answer 1 · 2022-05-28T05:54:59+03:00

Answer:

C) $52 per share

Explanation:

The cost basis of the stock includes the purchasing price + all commissions paid to the broker = $50 + $2 = $52

The $2 per stock dividend that the stockholder received must be reported as ordinary income and is taxed as such. The cost basis is used to calculate capital gains or losses.