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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Stevie

1 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.

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Terrilyn

1 months ago

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

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Marjory

13 days ago

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

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Lashawnda

22 days ago

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

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Winifred

1 months ago

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

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Susana

1 months ago

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

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Rhea

2 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?

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Willodean

2 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.

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Ciara

2 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.

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Gene

18 days ago

User 2

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Nadine

1 months ago

User 1

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Rhea

2 months ago

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

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Glory

2 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.

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