On January 15 of the current taxable year, Merle sold stock with a cost of $40,000 to his brother Ned for $25,000, its fair market value. On June 21, Ned sold the stock to a friend for $26,000.
a. What are the tax consequences to Merle and Ned?
b. Would Ned recognize any gain if he sold the stock for $41,000?

Question

Quizplus · Accepted Answer

The Answer of On January 15 of the current taxable year, Merle sold stock with a cost of $40,000 to his brother Ned for $25,000, its fair market value. On June 21, Ned sold the stock to a friend for $26,000.
a. What are the tax consequences to Merle and Ned?
b. Would Ned recognize any gain if he sold the stock for $41,000?

On January 15 of the Current Taxable Year, Merle Sold