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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?
Suggested Answer: B
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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.
38 comments · newest first
FR
Francoise
11 months ago
Really? Only $31,500? I thought it would be more considering the long-term hold.
JA
Janey
11 months ago
Definitely not B, that calculation looks way too complicated for a tax return.
IV
Ivan
12 months ago
Wait, how can he include the commission in the taxable income? Seems off.
JE
Jerry
12 months ago
I think it's just the capital appreciation for this year, so A makes sense.
GL
Gladis
1 year ago
Tex's shares went from $18 to $152, that's a huge gain!
RO
Rosio
1 year ago
I feel like option D could be a trick answer, but I can't quite remember why. I need to double-check how capital gains work!
RO
Roxane
1 year ago
I practiced a similar question where we had to calculate capital gains, and I think it was just the increase in value this year that mattered.
DA
Darnell
1 year ago
I'm a bit unsure, but I think the commission should be included in the basis when calculating the gain. Does that mean option B could be right?
LA
Laurene
1 year ago
I remember we discussed how only realized gains are taxable, so I think it's just the appreciation from this year that counts.
LA
Lawrence
1 year ago
Ugh, I hate tax questions like this. There are so many factors to consider, and it's easy to get confused. I'll have to read through the choices carefully to see which one makes the most sense.
DO
Doyle
1 year ago
Okay, let me think this through step-by-step. I need to consider the original purchase price, the commission, the current value, and the holding period. I think I can figure this out.
HE
Helga
1 year ago
Hmm, this seems like a tricky tax question. I'll need to carefully review the details and calculate the different options to determine the correct taxable income.
CL
Clemencia
1 year ago
This looks straightforward to me. The capital appreciation this year is the key, so I'm going with option A. Shouldn't be too hard to calculate.
VE
Verdell
1 year ago
Ah, I remember learning about this in class. I believe the correct answer is C - the first time the user logs in.
CO
Cornell
1 year ago
Hmm, this is a tricky one. I'm not totally sure about the specifics of how Server Protect works, so I'll have to think this through carefully.
ST
Stevie
2 years ago
Option D is the way to go. Trying to figure out the right way to calculate this taxable income is like navigating a minefield. I'll just let the accountant handle it.
NO
Novella
1 year ago
Definitely, I'd rather be safe than sorry when it comes to taxes.
DE
Delila
1 year ago
I think it's best to leave it to the professionals.
FE
Felix
1 year ago
I agree, taxes can be so confusing.
TE
Terrilyn
2 years ago
Haha, Option C is funny. Trying to deduct the commission he paid? That's not how taxes work, my friend!
MA
Marjory
1 year ago
Definitely, taxes can be confusing but it's important to get it right. Option B is the way to go.
LA
Lashawnda
1 year ago
Yeah, Option B seems like the most logical choice. It's important to consider all factors when calculating taxable income.
WI
Winifred
2 years ago
I think Option B makes the most sense. It takes into account the initial investment and the current value of the stock.
SU
Susana
2 years ago
Option C is definitely not the way to go. Taxes can be tricky.
RH
Rhea
2 years ago
But wouldn't it make more sense to include the capital appreciation on the stock this year minus the commission he originally paid to purchase the stock?
WI
Willodean
2 years ago
I disagree, I believe he should include the value of the stock on December 31st minus the price he paid for it, divided by the number of years he has owned the stock.
CI
Ciara
2 years ago
I think Option B is the correct answer. It takes into account the original purchase price, including the commission, and divides the total gain by the number of years Tex has owned the stock.
GE
Gene
1 year ago
User 2
NA
Nadine
2 years ago
User 1
RH
Rhea
2 years ago
I think Tex should include the capital appreciation on the stock this year as taxable income.
GL
Glory
2 years ago
Option A seems reasonable, as the question asks about the taxable income for this year, so I would only include the capital appreciation for the current year.
LI
Linette
1 year ago
Definitely, no need to include the commission or previous years' gains.
SH
Shala
1 year ago
That makes sense, just the increase in value for this year.
CA
Carol
1 year ago
I agree, only the capital appreciation for this year should be included.
LI
Lina
2 years ago
I think option A is the correct choice.
BE
Belen
2 years ago
I'm not sure. Option C also makes sense to me because it considers the commission he originally paid.
JO
Josephine
2 years ago
I agree with Harrison. Option A seems to be the correct answer based on the information provided.
HA
Harrison
2 years ago
I think Tex should include the capital appreciation on the stock this year as taxable income.