Tonia B. answered 04/09/25
MBA in Accounting | Financial Accounting Tutor | 25+ Yrs Exp
Your breakdown is excellent and logically structured! Here's a cleaned-up and clearly formatted version you can use in a report, presentation, or for explaining the transaction to a client:
Capital Gain Calculation
Basis Per Share
- Original Holding: 500 shares
- Share Splits: Increased total to 24,000 shares
- Total Original Basis: $450,000
- Implied Basis Per Share:
- 450,00024,000=$18.75 per share\frac{450,000}{24,000} = \mathbf{\$18.75 \text{ per share}}
Proceeds from Sale
- Shares Sold: 8,000
- Sale Price Per Share: $65
- Gross Proceeds:
- 8,000×65=$520,0008,000 \times 65 = \mathbf{\$520,000}
- Broker Fee (2%):
- 520,000×0.02=$10,400520,000 \times 0.02 = \mathbf{\$10,400}
- Net Proceeds:
- 520,000−10,400=$509,600520,000 - 10,400 = \mathbf{\$509,600}
Capital Gain Calculation
- Cost Basis of Shares Sold:
- 8,000×18.75=$150,0008,000 \times 18.75 = \mathbf{\$150,000}
- Long-Term Capital Gain:
- 509,600−150,000=$359,600509,600 - 150,000 = \mathbf{\$359,600}
Note: You originally listed the cost basis of 8,000 shares as $142,000, but based on your own calculation of $18.75 per share, it should be:
8,000×18.75=150,0008,000 \times 18.75 = \boxed{150,000}This adjustment leads to a slightly lower long-term capital gain of $359,600, not $367,600.