Cory recently sold his qualified small business stock for $84,000 after holding it for 10 years

Accounting Aug 07, 2020

Cory recently sold his qualified small business stock for $84,000 after holding it for 10 years. His basis in the stock is $46,000. Applying the rules as if the stock were acquired in 2019 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?

A) $2,850.

B) $5,320.

C) $5,700.

D) $10,640.

E) None of the choices are correct.

Expert Solution

Ans (E ) None of the choices are correct.

Cory not required to pay any tax on sale of QSBS because to claim exemption of tax the following must apply.

1) Investor is not a Corporation.

2) Acquired the stock for original issue.

3) Held the stock for atleast 5 years.

Qualified small business stock refers to shares of qualified small business(QSBS).Individuals receives tax benefit of sale of such Qualified business stock if it held such shares at least five years.

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