Question

If a stock was purchased in January 2004 for $1000 and sold in December 2005 for $3000, what is the taxable result?

A) Taxable capital gain of $2000
B) Taxable capital gain of $1000
C) Income of $2000
D) Annual taxable gain of $500

Answer 1

The taxable result of selling a stock at $3000 that was purchased for $1000 is a taxable capital gain of $2000.

Step-by-step explanation:

If a stock was purchased in January 2004 for $1000 and sold in December 2005 for $3000, the taxable result is a taxable capital gain of $2000. This is calculated by subtracting the original purchase price of the stock from the selling price, which in this case is $3000 - $1000 = $2000. From this, we learn that capital gain is the increase in value of the stock or any other asset between the time it is bought and when it is sold. Therefore, the correct answer is A) Taxable capital gain of $2000.