Over the past 20 years,Alfred has purchased 380 shares of Green,Inc. ,common stock.His first purchase was in 1994 when he acquired 30 shares for $20 a share.In 2000,Alfred bought 150 shares at $10 a share.In 2015,Alfred acquired 200 shares at $50 a share.Alfred intends to sell 125 shares at $60 per share in the current year (2016).If Alfred's objective is to minimize gain and assuming he can adequately identify the shares to be sold,what is his recognized gain?
A)$1,250
B)$3,520
C)$5,950
D)$6,250
E)None of the above

Question

Quizplus · Accepted Answer

To minimize gain, Alfred should sell the shares with the highest cost basis. He should sell 125 shares from the 2015 purchase, which had a cost basis of $50 per share. The gain per share is $60 - $50 = $10. Therefore, the total recognized gain is 125 shares * $10 = $1,250.

Over the Past 20 Years,Alfred Has Purchased 380 Shares of Green,Inc