5. Ken owns 1,000 shares of West Corporation common stock which he purchased in 20X4 for $18,000. On 3-30-X7 he purchases an additional 350 shares for $4,000. On 4-20-X7 he sells the original 1,000 shares for $10,000. On 5-15-X7 he purchases 400 shares of West stock for $7,000. What is Ken's recognized gain or loss as a result of the sale of the stock and what is the basis for the shares purchased on 5-15-X7, respectively? a $2 000 Joss: S O B00 basje

5. Ken owns 1,000 shares of West Corporation common stock which he purchased in 20X4 for $18,000. On 3-30-X7 he purchases an additional 350 shares for $4,000. On 4-20-X7 he sells the original 1,000 shares for $10,000. On 5-15-X7 he purchases 400 shares of West stock for $7,000. What is Ken's recognized gain or loss as a result of the sale of the stock and what is the basis for the shares purchased on 5-15-X7, respectively? a $2 000 Joss: S O B00 basje

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bob sold 100 shares of ABC stock for $2,100 and 300 shares of XYZ stock for $8,900. He purchased the ABC stock four years ago for $1,200 and the XYZ stock two years ago for $9,100. What is the net effect of these sales on Bob’s income? a. $200 net gain b. $700 net gain c. $900 net gain d. $1,100 net gain
Bob and Bill form Star Corporation with the following investments. Bob transfers machinery (basis of $36,000 and fair market value of $74,000) and Bill transfers land (basis of $19,000 and fair market value of $52,000) and services rendered (worth $22,000) in organizing the corporation. Each is issued 25 shares in Star Corporation. With respect to the transfers: Bill has a basis of $41,000 in the 25 shares he acquires in Star Corporation. Star Corporation has a basis of $41,000 in the land transferred by Bill. Bob has no recognized gain; Bill recognizes income/gain of $55,000. Neither Bob nor Bill has recognized gain or income on the transfers. None of these.
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2. Rye Corporation is owned 55% (55 shares) by Roger, 30% (30 shares) by Yolanda and 15% (15 shares) by Eric. Rye has E&P of $400,000. Roger's stock basis is $200,000, Yolanda's stock basis is $130,000 and Eric's stock basis is $80,000. a. What is the tax result to Roger if Rye redeems 30 shares for $350,000? Yolanda is Roger's wife. b. What is the tax result to Roger if Rye redeems 45 shares for $500,000? Yolanda is Roger's wife. c. What is the tax result to Roger if Rye redeems 55 shares for $600,000? Yolanda is Roger's wife.
W has a zero basis in his stock investment with Y Corporation, a C corporation. During the year, W receives a $50,000 cash distribution. His share of the current-year earnings and profits is a negative $30,000 and his share of the beginning-of-year accumulated earnings and profits is a negative $10,000. How does W treat the $50,000 distribution? Taxable dividend income Capital gain Nontaxable return of capital Part nontaxable return of capital and part capital gain
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