If a shareholder owns stock received as a gift from her mother, it cannot be § 1244 or § 1202 stock.

Question

Quizplus · Accepted Answer

Stock received as a gift is considered "substituted basis" property, which means it takes on the same basis as the property it was received in exchange for. In this case, the stock received as a gift would have the same basis as the stock that the mother owned, which would not qualify for § 1244 or § 1202 treatment.

If a Shareholder Owns Stock Received as a Gift from Her