Kelly purchased ten shares of Gentech stock for $200 in year 1 and sold all the shares in year 2 for $220 a share.Between year 1 and year 2,the price level increased by 5%.The tax on capital gains is 50%.If the capital gains tax is on nominal gains,how much tax does Sally pay on her gain?

Question

Quizplus · Accepted Answer

Sally's nominal gain is ($220 - $200) * 10 = $200. The tax on nominal gains is 50%, so she pays 50% of $200, which is $100.

Kelly Purchased Ten Shares of Gentech Stock for $200 in Year