Mitaya purchased 500 shares of Sundown Inc.,common stock on December 13,2014,at a cost of $3,600.She paid a commission of $150 on the purchase.On February 18,2015,she received 250 shares of Sundown Inc.,common stock as a tax-free dividend.Mitaya sells 600 shares for $3,700 on January 8,2016,and pays a $100 commission on the sale.Mitaya's gain (loss)on the sale is characterized as:
A)Long-term capital gain of $600.
B)Long-term capital gain of $500; short-term capital gain of $100.
C)Long-term capital gain of $100; short-term capital gain of $500.
D)Short-term capital gain of $600.

Question

Quizplus · Accepted Answer

The shares were held for more than one year, so the gain is long-term capital gain. The gain is $600, calculated as follows:Selling price: $3,700Less: Commission: $100Net proceeds: $3,600Less: Cost of shares sold: $3,000Gain: $600

Mitaya Purchased 500 Shares of Sundown Inc