Question

Monte inherited 1,000 shares of Corporation Zero stock from his father who died on March 4, 2020. His father paid $44 per share for the stock on February 2, 2019. The FMV of the stock on March 4, 2020, was $48 per share. Monte sold the stock for $54 per share on October 10, 2020. What is the amount and character of the gain or loss that Monte recognizes

Answer 1

Monte recognizes a long-term capital gain of $10,000 from selling his inherited stock.

Step-by-step explanation:

To determine the gain or loss that Monte recognizes from selling his inherited stock, we need to compare the selling price to the adjusted basis of the stock.

The adjusted basis is the original cost of the stock plus any adjustments made for events such as dividends or stock splits.

In this case, the adjusted basis of the stock is $44 per share, which was the price Monte's father paid for the stock. The selling price is $54 per share. Therefore, Monte recognizes a gain of $54 - $44 = $10 per share.

Monte inherited 1,000 shares of stock, so the total gain recognized is $10 x 1,000 = $10,000. This gain is considered a long-term capital gain since Monte held the stock for more than one year.

Therefore, Monte recognizes a long-term capital gain of $10,000 from selling his inherited stock.

Answer 2

$6,000 LTCG

Step-by-step explanation:

Calculation to determine the amount and character of the gain or loss that Monte recognizes

Using this formula

Recognized gain or loss =Amount realized -Basis

Let plug in the formula

Recognized gain or loss=(1,000 Shares*$54 per share)-(1,000shares*$48 per share)

Recognized gain or loss=$54,000-$48,000

Recognized gain or loss=$6,000 LTCG

Therefore the amount and character of the gain or loss that Monte recognizes is $6,000 LTCG reason been the any gain Amount on the sales of property that was inherited are often tend to be LTCG