How much gain or loss will homer recognize on its nov. 3

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Reference no: EM133371180

Question: Pumpkin, Inc. is a large, publicly traded corporation with shares trading at $16 per share on April 1. On April 1, Homer, Inc., a C Corporation, buys 1,000 shares of Pumpkin common stock for $16 per share (representing less than 5% of Pumpkin's outstanding stock). On Oct. 1, Pumpkin declares a $3 per share dividend payable on Oct. 31 with an ex-dividend date of Oct. 10. Pumpkin has ample earnings and profits available to cover this dividend. Homer, Inc. collects its $3,000 dividend on Oct. 31 and sells all if its Pumpkin stock for $13,000 on Nov. 3. Homer, Inc. has earned substantial capital gains on other investments during the year and Homer has over $2 million in taxable income this year. How much gain or loss will Homer recognize on its Nov. 3 sale of Pumpkin stock?

Reference no: EM133371180

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