Finra Series-6 Exam - 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

Limited Time Offer

25%

Off

Get Premium Series-6 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Francoise

3 months ago

Really? Only $31,500? I thought it would be more considering the long-term hold.

upvoted 0 times

...

Janey

3 months ago

Definitely not B, that calculation looks way too complicated for a tax return.

upvoted 0 times

...

Ivan

3 months ago

Wait, how can he include the commission in the taxable income? Seems off.

upvoted 0 times

...

Jerry

4 months ago

I think it's just the capital appreciation for this year, so A makes sense.

upvoted 0 times

...

Gladis

4 months ago

Tex's shares went from $18 to $152, that's a huge gain!

upvoted 0 times

...

Rosio

4 months 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!

upvoted 0 times

...

Roxane

4 months 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.

upvoted 0 times

...

Darnell

4 months 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?

upvoted 0 times

...

Laurene

5 months ago

I remember we discussed how only realized gains are taxable, so I think it's just the appreciation from this year that counts.

upvoted 0 times

...

Lawrence

5 months 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.

upvoted 0 times

...

Doyle

5 months 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.

upvoted 0 times

...

Helga

5 months 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.

upvoted 0 times

...

Clemencia

5 months 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.

upvoted 0 times

...

Verdell

5 months ago

Ah, I remember learning about this in class. I believe the correct answer is C - the first time the user logs in.

upvoted 0 times

...

Cornell

5 months 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.

upvoted 0 times

...

Stevie

10 months 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.

upvoted 0 times

Novella

8 months ago

Definitely, I'd rather be safe than sorry when it comes to taxes.

upvoted 0 times

...

Delila

8 months ago

I think it's best to leave it to the professionals.

upvoted 0 times

...

Felix

8 months ago

I agree, taxes can be so confusing.

upvoted 0 times

...

Terrilyn

10 months ago

Haha, Option C is funny. Trying to deduct the commission he paid? That's not how taxes work, my friend!

upvoted 0 times

Marjory

9 months ago

Definitely, taxes can be confusing but it's important to get it right. Option B is the way to go.

upvoted 0 times

...

Lashawnda

10 months ago

Yeah, Option B seems like the most logical choice. It's important to consider all factors when calculating taxable income.

upvoted 0 times

...

Winifred

10 months ago

I think Option B makes the most sense. It takes into account the initial investment and the current value of the stock.

upvoted 0 times

...

Susana

10 months ago

Option C is definitely not the way to go. Taxes can be tricky.

upvoted 0 times

...

Rhea

10 months 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?

upvoted 0 times

...

Willodean

10 months 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.

upvoted 0 times

...

Ciara

10 months 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.

upvoted 0 times

Gene

9 months ago

User 2

upvoted 0 times

...

Nadine

10 months ago

User 1

upvoted 0 times

...

Rhea

11 months ago

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

upvoted 0 times

...

Glory

11 months 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.

upvoted 0 times