# Gain or Loss on Shares

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Carol purchased and sold shares in Ceeco Limited as follows:
10 April 2002 - Purchased 5,000 shares for £15,000.
12 January 2017 - Sold 1,800 shares for £4,000.
1 February 2017 - Purchased 6,800 shares for £21,080.
31 March 2017 - Sold 10,000 shares for £40,000.

(1) What is the gain or loss on the sale of shares on 12 January 2017?

(2) What is the gain or loss on the sale of shares on 31 March 2017?

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Question 1
Match shares sold with shares purchased in the next 30 days.
Cost/share = £21,080/6,800 = £3.10
Cost of 1,800 shares = 1,800 x £3.10 = £5,580
Loss = £4,000 (proceeds) - £5,580 (cost) = -1,580

Question 2
S.401 Holding Pool
Number of shares = 6,800 - 1,800 + 5000 = 10,000
Cost = 21,080 - 5,580 + 15,000 = £30,500
Gain = £40,000 (proceeds) - £30,500 (cost) = £9,500

3 Sequential Rules:
1) Match shares sold against shares bought on the same day.
2) If the above is n/a, then match shares sold with shares bought in the next 30 days (see question 1 calculations).
3) If the above is n/a, then setup a S.401 holding pool and calculate the average cost of the shares (see question 2 calculation).