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9 December, 00:37

Upon her grandfather's death, Jordan inherited 10 shares of Universal Corp. stock that had a fair market value of $5,000. Her grandfather acquired the shares in 1995 for $2,500. Four months after her grandfather's death, Jordan sold all her shares of Universal for $7,500. What was Jordan's recognized gain in the year of sale?

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  1. 9 December, 00:55
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    Answer: Jordan's recognized gain in the year of sale is $2500.

    Explanation:

    Given that,

    Jordan inherited 10 shares of universal corp. stock upon her grandfather's death and have a fair market value of $5000

    Jordan's grandfather purchase these shares in 1995 for $2500

    After four months of her grandfather's death, Jordan sold all of the shares for $7500

    So,

    Jordan's recognized gain in the year of sale = the value of sale - the fair market value at the time of her grandfather's death

    = $7500 - $5000

    = $2500
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