How much of the sale price will be subject to long term


1. Horace was a participant in a qualified stock bonus plan. He sold stock 10 months after he received it as a distribution from the stock bonus plan. When the stock was distributed, Horace had a net unrealized appreciation of $10,000. He also had ordinary income of $25,000. The fair value of the stock at the time of sale was $75,000. How much of the sale price will be subject to long term capital gain treatment?

$40,000

$10,000

25,000

$50,000

2. Two weeks ago, Eric retired from Chemcorp. When Eric retired his stock bonus plan had 20,000 shares of Chemcorp stock. Chemcorp took deductions of $30 per share for the contributions made to Eric's account. At retirement, Eric took a lump sum distribution of the employer stock. The fair market value of the stock at distribution was $40.00 per share. Six months later, Eric sold the stock for $45.00 per share. What amount was subject to ordinary income at the date the stock was distributed?

$600,000

$400,000

$0

$800,000

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Financial Management: How much of the sale price will be subject to long term
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