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

Exercise 3

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 $18,000 in 2010, what is the nature and amount of the loss from the sale? a. $2,000 short-term loss.
B) $5,000 long-term loss.
C) $7,000 long-term loss.
D) $2,000 short-term loss and $5,000 long-term loss.