Randy bought 10 shares of stock on April 1, 2012, for a total of $5 per share. He sold every stake for $200 on March 1, 2013. The transaction has a $150 income tax consequence.
Any profit or capital gain that an individual receives through the sale of short-term capital assets is referred to as a short-term capital gain. This includes any profit on assets that can depreciate.
April 1, 2012, to March 1, 2013, for holding
The shares have been held for less than a year, thus there has been a short-term gain or loss.
Here, Sale Value = $200
Cost of acquisition = 5 × 10
= $50
A short-term capital gain is present since the sale price is higher than the purchase price.
Short-term capital gain = Sale Value - Cost of acquisition
= $200 - $50
= $150
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