Question

Angela purchased 1,000 shares of stock in XYZ company three years ago for $27 a share. She still owns the stock and the price has moved up to $45 per share. What is her current tax liability on this gain assuming capital gains are taxed at a rate of 15%?

Answer 1

Answer:

$2700

Explanation:

First you have to calculate the total investment of Angela multiplying the numbers of shares by the price of each one

= Total investment= $27 *1.000

=Total Investment = $27.000

Now you have calculate the total price of the 1.000 shares according with the new price:

Total Value of the share= $45*1.000

Total Value of the share= 45.000

Now, you have to calculate the difference between the actual price and the initial investment:

Capital gains = $45.000-$27.000

Capital Gains = $18.000

Now that you know the capital gains you have to calculate the tax at 15%:

Capital Gains taxed= $18.000* 15%= $2.700