Suppose you purchased 100 shares of stock in 1990 for $25 a share,and you sell them today for $50 a share.If the capital gains tax is 28 percent,your tax liability is
A)$70.
B)$2,500.
C)$700.
D)indeterminate without the inflation rate.

Question

Quizplus · Accepted Answer

First, calculate the initial investment:
100 shares x $25/share = $2,500

Then, calculate the sale price:
100 shares x $50/share = $5,000

Calculate the capital gains:
$5,000 - $2,500 = $2,500

Calculate the tax liability:
$2,500 x 0.28 = $700.

Therefore, the correct answer is C, $700.

Suppose You Purchased 100 Shares of Stock in 1990 for $25