Sybil purchased 500 shares of Qualified Small Business Stock QSB) for $25,000 on March 2, 2003. On November 29, 2014, she sells the stock for $125,000. Sybil also sells 100 shares of stock she acquired two years ago realizing a gain of $20,000. Sybil has $100,000 of other income. Which of the following statements about the stock sale is/are true? I. The tax paid on Sybil's two stock sales is $17,000. II. The tax rate on the $20,000 gain is 15%.

Question

Quizplus · Accepted Answer

The gain on the QSB stock is eligible for the 100% exclusion, so there is no tax on that gain. The gain on the other stock is taxed at 15%, so the tax on that gain is $20,000 x 15% = $3,000. The total tax paid on both stock sales is $3,000.

Sybil Purchased 500 Shares of Qualified Small Business Stock QSB)