Diana bought 1,500 shares of Dalton Protection, Inc., common stock for $10 per share. She paid her broker a $300 commission to close the purchase. The following year, Diana sold 1,000 of the shares for $17 per share and paid a commission of $175 on the sale. What is Diana's capital gain on the sale of the stock?

Question

Quizplus · Accepted Answer

Diana's capital gain is calculated by subtracting the cost basis of the shares sold from the total sale proceeds. She sold 1,000 shares at $17 each, totaling $17,000. The cost basis for these shares is $10,000 (1,000 shares at $10 each) plus a proportional share of the initial commission ($300 * 1,000/1,500 = $200), totaling $10,200. The sale commission is $175. Therefore, the capital gain is $17,000 - $10,200 - $175 = $6,625.

Diana Bought 1,500 Shares of Dalton Protection, Inc