In 2014,Daryl sold 425 shares of Basketball Heaven Mutual Fund for $18,000.He made the following purchases of Basketball Heaven stock: Assuming Daryl uses the single category average cost method,he will realize:

Question

In 2014,Daryl sold 425 shares of Basketball Heaven Mutual Fund for $18,000.He made the following purchases of Basketball Heaven stock:  Assuming Daryl uses the single category average cost method,he will realize:

Quizplus · Accepted Answer

Using the single category average cost method, we need to calculate the average cost per share of the Basketball Heaven Mutual Fund.

Total cost of purchases = $10,250
Total number of shares = 200 + 250 + 100 + 150 = 700
Average cost per share = $10,250 / 700 = $14.64 per share

Since Daryl sold 425 shares, we need to determine how many shares were purchased before the sale:

200 + 250 = 450 shares purchased before the sale

The cost basis of the shares sold is therefore:

450 shares x $14.64 per share = $6,588

The proceeds from the sale were $18,000, resulting in a long-term loss of:

$6,588 - $18,000 = $11,412

However, since this is a long-term loss, we can only use up to $3,000 of it to offset other capital gains in the current tax year. The remaining loss can be carried forward to future years. Therefore, the answer is:

$3,000 long-term loss in the current tax year + $8,412 long-term loss carried forward to future years = $3,462.50 long-term loss.

In 2014,Daryl Sold 425 Shares of Basketball Heaven Mutual Fund