In 2010, Dan purchased 100 shares of American Express for $90 per share. In 2014

Question

In 2010, Dan purchased 100 shares of American Express for $90 per share.

In 2014, Dan purchased an additional 50 shares of American Express, this time paying $75 per share.

In 2015, Dan sold 70 shares of American Express for $80 per share. Dan cannot determine whether he sold some of the shares from his 2010 purchase, his 2014 purchase, or a combination.

How much gain or loss should Dan report on his 2015 tax return?

no gain or loss

gain of $350

loss of $350

loss of $700

no gain or loss

gain of $350

loss of $350

loss of $700

Explanation / Answer

Loss of $350

Since, there is no detemination as to wheher which shares are sold. The weighted average is taken.

Hence, the cost of 150 shares is $9000+$3750= $12750

Thus, Cost of 70 shares = $5950

Less- Sale of Shares =$5600

Loss on shares = $350

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