Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 70

In 2010 Ann received 1,000 shares of stock as a gift from her husband Tim, who purchased them in 2003. At the time of the gift, the FMV of the stock was $20,000 and Tim's basis was $25,000. If Ann sells the stock for $28,000 in 2010, what are the nature and amount of the gain from the sale? a. $3,000 long-term gain.
B) $8,000 long-term gain.
C) $3,000 short-term gain and $5,000 long-term gain.
D) $3,000 long-term gain and $5,000 short-term gain.