George bought the following amounts of stock a over the years:

Ch7

1. At the beginning of his current tax year, David invests $11,590 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $740 in interest ($370 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 5.4 percent. (Round your intermediate calculations to the nearest whole dollar amount.)

a. How much interest income will he report this year if he elects to amortize the bond premium?

Semiannual Adjusted Basis Interest Premium Reported

Period of bond at beginning Received Amortization Interest

Of semiannual period

1

2

Yearly total

b. How much interest will he report this year if he does not elect to amortize the bond premium?

Interest Reported

2. John bought 2,100 shares of Intel stock on October 18, 2015, for $52 per share plus a $750 commission he paid to his broker. On December 12, 2019, he sells the shares for $75.50 per share. He also incurs a $1,000 fee for this transaction.

a. What is John’s adjusted basis in the 2,100 shares of Intel stock?

Adjusted basis

b. What amount does John realize when he sells the 2,100 shares?

Sales Realization

c-1. What is the gain/loss for John on the sale of his Intel stock?

Gain/Loss

3. Sue has 5,500 shares of Sony stock that have an adjusted basis of $35,750. She sold the 5,500 shares of stock for cash of $16,500, and she also received a piece of land as part of the proceeds. The land was valued at $22,500 and had an adjusted basis to the buyer of $13,500.

What is Sue's gain or loss on the sale of 5,500 shares of Sony stock?

4. George bought the following amounts of Stock A over the years: (Loss amounts should be indicated with a minus sign.)

Date Purchased Number of Shares Adjusted Basis

Stock A 11/21/1993 1,230 $ 29,520

Stock A 3/18/1999 615 11,070

Stock A 5/22/2008 980 35,280

On October 12, 2019, he sold 1,545 of his shares of Stock A for $38 per share.

a. How much gain/loss will George have to recognize if he uses the FIFO method of accounting for the shares sold?

Gain or loss to be recognized?

b. How much gain/loss will George have to recognize if he specifically identifies the shares to be sold by telling his broker to sell all 980 shares from the 5/22/2008 purchase and 565 shares from the 11/21/1993 purchase?

Gain or loss to be recognized

5. Three years ago, Adrian purchased 540 shares of stock in X Corp. for $79,380. On December 30 of year 4, Adrian sells the 540 shares for $75,600. (Leave no answers blank. Enter zero if applicable. Loss amounts should be indicated with a minus sign.)

a. Assuming Adrian has no other capital gains or losses, how much of the loss is Adrian able to deduct on her year 4 tax return?

Deductible loss

c. Assuming Adrian has no other capital gains or losses, except that on January 20 of year 5, Adrian purchases 540 shares of X Corp. stock for $75,600. How much loss from the sale on December 30 of year 4 is deductible on Adrian’s year 4 tax return? What basis does Adrian take in the stock purchased on January 20 of year 5?

Deductible loss

Basis