Question

Client inherits 1,000 shares of ABC mutual fund when NAV is 9.50 and POP is $10.00 and elects to receive all distributions in cash. Two years later, sells all when NAV is 14.25 and POP is 15.00. What are the tax consequences of this sale?

1) Long-term capital gain of $4,750.
2) Long-term capital gain of $5,500.
3) Long-term capital gain of $4,250.
4) Long-term capital gain of $5,000.

Answer 1

The tax consequences of selling the inherited shares of the ABC mutual fund would result in a long-term capital gain of $4,250.

Step-by-step explanation:

The tax consequences of selling the inherited shares of the ABC mutual fund would result in a long-term capital gain of $4,250.