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1 March, 03:17

Bernie is a participant in his employer's non-contributory ESOP. Two years ago, his employer contributed stock with a fair market value of $30,000 into Bernie's account. Bernie retired one year later and took distribution of the stock when its fair market value was $40,000. Two years after his retirement, Bernie sold the stock for $50,000. What is the appropriate tax treatment available to Bernie upon sale of the stock?

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  1. 1 March, 06:08
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    taxable amount = $10,000

    Explanation:

    given data

    2 year ago fair market value = $30,000

    fair market value = $40,000

    sold the stock = $50,000

    solution

    we get here taxable amount when ESOP sold

    so taxable amount = Selling price - fair market value on distribution date ... 1

    put here value

    taxable amount = $50000 - $40000

    taxable amount = $10,000 long term capital gain
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