Over the past 25 years,Alfred has purchased 380 shares of Green,Inc. ,common stock.His first purchase was in 1987 when he acquired 30 shares for $20 a share.In 1989,Alfred bought 150 shares at $10 a share.In 2008,Alfred acquired 200 shares at $50 a share.Alfred intends to sell 125 shares at $60 per share in the current year.If Alfred's objective is to minimize gain,what is his recognized gain?

Question

Quizplus · Accepted Answer

To minimize gain, Alfred should sell the shares with the highest cost basis first. He should sell the 200 shares purchased in 2008 at $50 each. Selling 125 of these shares at $60 each results in a gain of ($60 - $50) * 125 = $1,250.

Over the Past 25 Years,Alfred Has Purchased 380 Shares of Green,Inc