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During 2023, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets Date Acquired Purchase Price Broker's Commission Paid at Time of

During 2023, your clients, Mr. and Mrs. Howell, owned the following investment assets:

Investment Assets Date Acquired Purchase Price Broker's Commission Paid at Time of Purchase
300 shares of IBM common (NYSE: IBM) 11/22/2020 $ 10,450 $ 100
200 shares of IBM common (NYSE: IBM) 4/3/2021 43,350 300
3,000 shares of Apple preferred (NASDAQ: AAPL) 12/12/2021 157,000 1,300
2,100 shares of Cisco common (NASDAQ: CSCO) 8/14/2022 53,500 550
420 shares of Vanguard mutual fund 3/2/2023 15,700 No-load fund*

*No commissions are charged when no-load mutual funds are bought and sold.

Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2023 and to reinvest in municipal bonds. The following investment assets were sold in 2023:

Investment Assets Date Sold Sale Price Broker's Commission Paid at Time of Sale
300 shares of IBM common 5/6 $ 14,700 $ 100
3,000 shares of Apple preferred 10/5 222,400 2,000
2,100 shares of Cisco common 8/15 63,350 650
451 shares of Vanguard mutual fund 12/21 16,700 No-load fund*

*No commissions are charged when no-load mutual funds are bought and sold.

The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $14,600 on the Form 1099-B they received.

In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning 2023:

  • The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2023.
  • In 2017, Mrs. Howell loaned $7,000 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2023, and Mrs. Howell has been notified she will not be receiving any repayment of the loan.
  • The Howells have a $3,300 short-term capital loss carryover and a $5,800 long-term capital loss carryover from prior years.
  • The Howells did not instruct their broker to sell any particular lot of IBM stock.
  • The Howells earned $3,500 in municipal bond interest, $3,500 in interest from corporate bonds, and $5,000 in qualified dividends.
  • Assume the Howells have $155,000 of wage income during the year.

a-1. Use Form 8949 to compute net long-term and short-term capital gains. Assume that asset bases are reported to the IRS.

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