Sadie sold 10 shares of stock to her brother, George, for $500 16 months ago. Sadie had purchased the stock for $600 two years earlier. If George sells the stock for $700, what are the amount and character of his recognized gain or loss in the current year?

Question

Quizplus · Accepted Answer

Sadie held the stock for more than one year before selling it to George, so her $100 loss is a long-term capital loss. When George sells the stock for $700, he has a $200 long-term capital gain calculated as follows: Selling price ($700) - George's basis ($500) = Gain ($200).

Sadie Sold 10 Shares of Stock to Her Brother, George