Allen owns 100 shares of Prime Corp., a publicly traded company, which Allen purchased on January 1, Year 1, for USD10,000. On January 1, Year 3, Prime declared a 2-for-1 stock split when the fair market value (FMV) of the stock was USD120 per share. Immediately following the split, the FMV of Prime stock was USD62 per share. On February 1, Year 3, Allen had his broker specifically sell the 100 shares of Prime stock received in the split when the FMV of the stock was USD65 per share. What amount should Allen recognize as long-term capital gain income on his Form 1040, U.S. Individual Income Tax Return, for Year 3?
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