Question

Kevin purchases 1,000 shares of Bluebird Corporation stock on October 3, 2019, for $300,000. On December 12, 2019, 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 December 31, 2019. Kevin sells 500 shares of Bluebird stock on March 1, 2020, for $162,500.a. The adjusted basis of Kevin's Bluebird stock on December 31, 2018, is $_________b. What is Kevin's recognized gain or loss from the sale of Bluebird stock on March 1, 2019, assuming the shares sold are from the shares purchased on December 12, 2018?c. What is Kevin's recognized gain or loss from the sale of Bluebird stock on March 1, 2019, assuming Kevin cannot adequately identify the shares sold?

Answer 1

a. $510.000

b. $22.500 gain

c. $16.785 gain

Step-by-step explanation:

a. Kevin bought in total 1750 shares, and for it he spent $510.000

So 1 share is $291,43

b. He bought 500 shares 12.12.2018 for $140.000, then he sold those 500 shares for $162.500. Difference is the gain of $22.500

c. Not knowing from which batch of shares did he sell his shares we already know that avg 1 share is $291,43, so 500 share is $145.715 and he has sold 500 shares for 162.500. Difference is the gain of $16.785