Question

Two years ago Joshua Ryan bought 100 XYZ at $60 per share. While he held the stock it paid dividends of $1 the first year and $1.50 the second year. Joshua sold the shares at $40 per share after a 2 for 1 stock split. How much gain or loss did he incur per share for tax purposes

Answer 1

Answer: He incur $10 per share for tax purposes.

Step-by-step explanation:

Formula to calculate a gain or loss for tax purposes:

Gain or Loss for tax purposes = proceeds - cost basis

Cost per share = $ 60

After 2 for 1 stock split, the value of per share = (Cost per share) ÷2

= ($60) ÷2 = $30

Sale price of a share = $40

Since, $40 > $30, i.e. Sale price> Cost per share .So its a gain.

Gain= $40 - $30 = $10

Hence, he incur $10 per share for tax purposes.