Question :

(1) In 2006, Gitta contributed property with a basis of $500,000 and a fair market value of $3,000,000 to a qualified small business corporation for all of its general stock. She sells the stock in 2013 for 4,000,000. Evaluate the amount of taxable gain on the transaction?

(2)

Joy purchased 200 shares of HiLo Mutual Fund on July 15, 2009, for $10,500, and has been reinvesting dividends. On 15^th December, 2013, she sells 100 shares.

Amount               No. of shares

Purchased July 15, 2009 $10,500                200

Reinvested dividends, Oct 1, 2010            800        10

Reinvested dividends, Oct 1, 2011            970        20

Reinvested dividends, Oct 1, 2012            980        20

$13,250 250

Determine the basis for the shares sold consider the FIFO cost method?

What is the basis for the shares sold consider the average cost method?