Question

Serena purchased 10 shares of GLC, Inc. stock for $200 per share; one year later she sold the 10 shares for $220 a share. Over the year, the price level increased from 135.0 to 143.1. The tax rate on capital gains is 50 percent. If the capital gains tax is on nominal gains, how much tax does Serena pay on her gain?

Answer 1

Answer:

$100

Explanation:

Gain on the stock sale = Value of sold shares - Value of purchased shares

Gain on the stock sale = 10*$220 - 10*$200

Gain on the stock sale = $2,200 - $2,000

Gain on the stock sale = $200

Tax pay on the gain = Gain on the stock sale * Tax rate on capital gains

Tax pay on the gain = $200 * 50%

Tax pay on the gain = $100