On July 25,2015,Marilyn gives stock with a FMV of $7,500 and a basis of $5,000 to her nephew Darryl.Marilyn had purchased the stock on March 18,2015.Darryl sold the stock on April 18,2016 for $7,800.As a result of the sale,what will Darryl report on his 2016 tax return?

Question

Quizplus · Accepted Answer

Darryl will report a long-term capital gain of $2,800 ($7,800 - $5,000 basis). Although Marilyn held the stock for less than a year, the holding period "tacks on" to Darryl's holding period due to the gift. Therefore, since Darryl held the stock for over a year before selling it, the gain is considered long-term.

On July 25,2015,Marilyn Gives Stock with a FMV of $7,500