Calculate Helen’s net capital gain or loss from all of the above transactions and determine whether the results are short-term or long-term, including how much

QUESTION 3

Helen Pitt has been an investor ever since she began having her own money from part-time jobs.  Her grandpa, Joe Pitt, was so excited when Helen was born, that he bought 200 shares of Disney stock the day she was born, intending to give her one share per year of age every year on her birthday until she was 15 (one share at age one, two shares at age two, etc.).  Helen was born August 1, 1990.  (For purposes of the Disney stock only, we will ignore the impact of any stock splits).  Joe was also an avid investor and liked to buy things that lasted for decades.  He bought 1,000 shares of Ford Motor Company stock on August 1, 1977 for $1.80 per share.  On August 8, 2000, Joe gave Helen a gift of some of his Ford shares.  This gift was of 5,734 shares.  On August 14, 2015, Grandpa Joe passed away.  His will left all of his remaining shares in Ford to Helen.  Helen decided to go back to college in the fall of 2016 and needed money for tuition so she sold all of her Ford and Disney stocks on June 15, 2016.  She paid a broker a 1% commission based upon the gross sales price of the trades.  Joe’s will also left Helen a large investment account at Charles Schwab.  The details of the various trades made AFTER Joe’s death are below (assume the broker has the classification correct).  Finally, Helen made an investment of her own in Sports Authority (SA) in September 2015 for $90,000.  In February 2016, SA announced it was going into Chapter 11 bankruptcy to reorganize its debts.  However, that did not work out so well and in May 2016, SA announced it was going into Chapter 7 liquidation and by the end of August 2016 sold all of its assets and ceased all business activities.

 

Details of the Charles Schwab account:

Required:  Calculate Helen’s net capital gain or loss from all of the above transactions and determine whether the results are short-term or long-term, including how much, if any, and the character of any carryover to the following year.  To receive credit, you must show all of your work and explain your reasoning for each conclusion you make.  Simply showing numbers on a page will not result in credit.

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