Sybil purchased 500 shares of Qualified Small Business Stock (QSB)for $25,000 on March 2,2002.On November 29,2013,she sells the stock for $125,000.Sybil also sells 100 shares of stock she acquired two years ago realizing a gain of $20,000.Sybil has $100,000 of other income.Which of the following statements about the stock sale is/are true?
I.The tax paid on Sybil's two stock sales is $17,000.
II.The tax rate on the $20,000 gain is 15%.

Question

Quizplus · Accepted Answer

The $100,000 gain from the sale of QSB stock is eligible for the 100% exclusion, so no tax is paid on that gain. The $20,000 gain from the sale of the other stock is taxed at a 15% rate, resulting in a tax of $3,000. Therefore, the total tax paid on the two stock sales is $3,000.

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