Jessica owned 200 shares of OK Corporation with a basis of $12,000 and a FMV of $24,000.Jessica received 20 stock rights as a nontaxable distribution with a total FMV of $8,000.Jessica sold the stock rights for $4,000.Jessica's gain or loss on the sale was

Question

Quizplus · Accepted Answer

The correct answer is A because the gain or loss on the sale of the stock rights is calculated as the difference between the sale price and the FMV of the stock rights at the time of distribution. In this case, the sale price is $4,000 and the FMV of the stock rights at the time of distribution is $8,000, so the gain on the sale is $4,000.

Jessica Owned 200 Shares of OK Corporation with a Basis