A person owned 400 shares of xyz common stock which cost $20,000. xyz then had a 2-for-1 stock split. after the split, the person sold 100 shares for $10,000. how much gain (or loss resulted from the sale?

During a 2-for-1 split, investors usually receive an additional share for each one he/she holds and the value of each share is halved. Before the split, the investor held 400 shares of xyz common stock whose total value was $20,000. This means that each stock was valued at $50 each. Therefore after the 2-for-1 split this investor now possessed 800 shares, with each share being valued at $25 per share. If the investor sold 100 shares for $10,000 this means that each share was valued at $100 in this transaction; a profit of $75 on each share or ($75*100) $7,500 in total. The number of shares this investor remained with are 700 shares valued at $25 each. So even if he/she decided to sell them at market value of $25 each, this would amount to a total of $17,500. If you add $10,000 to this amount (for the 100 shares sold at $100) this comes to a total of $27,500. This is still a profit considering that the total value of the 400 shares before was $20,000