On July 25,2015,Karen gives stock with a FMV of $7,500 and a basis of $8,000 to her nephew Bill.Karen had purchased the stock on March 18,2015.Bill sold the stock on April 18,2016 for $6,000.As a result of the sale,what must Bill report on his 2016 tax return?

Question

Quizplus · Accepted Answer

Bill's basis in the stock is $7,500 (the FMV at the time of the gift), but the selling price is only $6,000, resulting in a $1,500 loss. Since Bill held the stock for less than one year before selling it, the loss is considered a short-term capital loss (STCL). Therefore, Bill will report a ($1,500) STCL on his 2016 tax return.

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