Tonya purchased 500 shares of Home Depot,Inc.common stock on December 13,2014,at a cost of $3,600.She paid a commission of $150 on the purchase.On February 18,2016,she received 250 shares of Home Depot,Inc.common stock as a tax-free dividend.Tonya sells 600 shares for $3,700 on January 8,2017,and pays a $100 commission on the sale.Tonya's gain (loss)on the sale is characterized as:

Question

Quizplus · Accepted Answer

The shares sold were purchased more than one year before the sale, so the gain is long-term. The gain is calculated as the difference between the sale price and the cost basis, which is the original purchase price plus the commission. The cost basis for the 600 shares sold is $3,600 + $150 = $3,750. The sale price is $3,700, so the gain is $3,700 - $3,750 = $50.

Tonya Purchased 500 Shares of Home Depot,Inc