Fran Bought Stock in the FCM Corporation 4 Years Ago

question 64

Essay

Fran bought stock in the FCM Corporation 4 years ago at a price of $18,000. She sold it this year for $22,225 and paid her broker $225 from the proceeds of the sale.
a. What is Fran's amount realized?
b. What is Fran's adjusted basis?
c. What is Fran's realized gain or loss?
d. What is Fran's recognized gain or loss?
e. How much of the gain or loss should be included in her tax return?

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Definitions:

Abstract Principles

Fundamental ideas or concepts that are not tied to specific, tangible instances but apply broadly across different situations.

Preoperational Stage

A stage in Piaget’s theory of cognitive development (ages 2-7) where children begin to engage in symbolic play but don't yet comprehend concrete logic.

Concrete Operations Stage

Piaget’s third stage of cognitive development, in which the school-age child becomes capable of logical thought processes but is not yet capable of abstract thinking.

Logical Thinking

The process of using rational, systematic steps based on sound reasoning to arrive at a conclusion.