Rachael purchased 500 shares of Qualified Small Business Stock (QSB)for $900,000 on March 2,2009.On November 29,2017,she sells the stock for $1,000,000.Rachael also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000.Which of the following explain(s)tax consequences of the QSB stock sale?
I.The effective tax rate applied to the net gain on the sale of the QSB stock is 15%.
II.Rachael nets her $10,000 loss with her $100,000 gain before applying her exclusion rate.
III.Rachael is eligible for a 75% exclusion of the gain from the QSB stock sale.
IV.The QSB stock is QSB stock partly because Rachael held the stock for the required 3-year minimum.

Question

Rachael purchased 500 shares of Qualified Small Business Stock (QSB)for $900,000 on March 2,2009.On November 29,2017,she sells the stock for $1,000,000.Rachael also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000.Which of the following explain(s)tax consequences of the QSB stock sale?
I.The effective tax rate applied to the net gain on the sale of the QSB stock is 15%.
II.Rachael nets her $10,000 loss with her $100,000 gain before applying her exclusion rate.
III.Rachael is eligible for a 75% exclusion of the gain from the QSB stock sale.
IV.The QSB stock is QSB stock partly because Rachael held the stock for the required 3-year minimum.
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Quizplus · Accepted Answer

Rachael is eligible for a 75% exclusion of the gain from the QSB stock sale because she held the stock for more than five years. She can net her $10,000 loss with her $100,000 gain before applying the exclusion rate.

Rachael Purchased 500 Shares of Qualified Small Business Stock (QSB)for