In addition to other gifts, Megan made a gift of stock to Jeri in 1976. Megan had purchased the stock in 1974 for $7,500. At the time of the gift, the stock was worth $20,000. If Megan paid $850 of gift tax on the transaction in 1976, what is Jeri's gain basis for the stock?
A) $7,500
B) $8,350
C) $9,017
D) $20,000
E) None of the above

Question

Quizplus · Accepted Answer

Jeri's gain basis for the stock is Megan's adjusted basis plus any gift tax paid. Megan's adjusted basis is the original purchase price of $7,500. So, Jeri's gain basis is $7,500 + $850 = $8,350.

In Addition to Other Gifts, Megan Made a Gift of Stock