Adam Purchased 1,000 Shares of Airco Inc

question 124

Multiple Choice

Adam purchased 1,000 shares of Airco Inc.common stock for $22,000 on February 3,2014.On April 1,2017,Adam received 100 new shares in a nontaxable stock dividend.As of April 1,the stock was trading at $25 per share.Adam sells the 100 new shares on June 15,2017 for $2,400.Due to the stock sale,Adam will recognize a

• A)$100 STCL.
• B)$2,400 STCG.
• C)$400 STCG.
• D)$400 LTCG.

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Definitions:

Significant Influence

A situation where an investor holds power to participate in the financial and operating policy decisions of an investee but does not control or jointly control those policies.

Associate

An entity over which the investor has significant influence.

Investor

An individual or organization that allocates capital with the expectation of receiving financial returns.

Pension Scheme

A plan or fund that provides retirement income to employees, funded by contributions from employer, employee or both.