Finra Exam Series-6 Topic 2 Question 76 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 76
Topic #: 2

Tex Payor owns 500 shares of Amazon.com, Inc. that he bought seven years ago when the stock price was $18 a share, at which time he paid a commission of $12.95 to purchase the stock. At the beginning of this year, Amazon was selling for $89 a share. Today, December 31st, Amazon's stock closed at $152 a share.

Based on this information, what must Tex include on this year's tax return as taxable income from his investment in Amazon?

Aonly the capital appreciation on the stock this year: $63 a share x 500 shares = $31,500

Bthe value of the stock on December 31st minus the price he paid for it, which includes the commission he paid, divided by the 7 years he has owned the stock: $152 - ($18 + $12.95) x 500 shares = $60,525 7 = $8,646

Cthe capital appreciation on the stock this year minus the commission he originally paid to purchase the stock:($63 - $12.95) x 500 = $25,025

Dnone of the above

Show Suggested Answer

Suggested Answer: B

Mr. Nomad's friend can engage in the activities described in Selections I and II only. A limited power of attorney gives Mr. Nomad's friend the authority to buy and sell securities on Mr. Nomad's behalf, but not to make any cash withdrawals. He would need a full power of attorney to be able to do so.

by Carmelina at Apr 29, 2024, 03:46 AM

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17 days ago

I think Tex should include the capital appreciation on the stock this year as taxable income.

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