Question

John purchased 140 shares of UGA Corporation for $10 per share last year. He received a $1.00 dividend per share. If he sells all of the shares for $15.00 each, what will be his capital gain in percentage terms? (Round answer to 0 decimal place, e.g. 55.)

Answer 1

John's capital gain is 50%

Step-by-step explanation:

The dividends that John received are taxed as part of his gross income, but if he kept the UGA stock for more than a year and then sold it for a profit, his gain will be taxed as capital gains:

capital gain per stock = $15 (selling price) - $10 (purchase price) = $5

A $5 gain represents a 50% capital gain (= ($5 / $10) x 100)