Mr. Z purchased 100 units of a private company's shares for $450 in 2020. If he sold the 100 units for $600 in 2021. What is the capital gain or loss on his disposition in 2021?   Question 3 options:   a)  $150 gain   b)  $75 gain   c)  $450 loss   d)  $150 loss

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Q: On December 28, 2020, Kramer sells 150 shares of Lavender, Inc. stock for $77,000. On January 10,…

A: Please see the next step for the solution

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.