Under the terms of Q's will, beneficiary X was to receive a cash (pecuniary) bequest of $25,000.X agreed to accept certain shares of corporate stock, FMV $25,000, out of the Estate of Q in satisfaction of this bequest.The basis of the shares to the Q Estate was $21,000, the value of the shares at the date of Q's death.Based on these facts,

Question

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The Estate of Q will recognize a $4,000 gain because the shares appreciated from $21,000 (basis) to $25,000 (FMV). X will have a $25,000 basis in the shares, which is the FMV at the time of transfer.

Under the Terms of Q's Will, Beneficiary X Was to Receive