Lisa sells some stock she purchased several years ago for $10,000 to her brother Bart for $8,000.One year later Bart sells the stock for $12,000.The tax consequences to Lisa and Bart are:

Lisa Bart

Question

Lisa sells some stock she purchased several years ago for $10,000 to her brother Bart for $8,000.One year later Bart sells the stock for $12,000.The tax consequences to Lisa and Bart are:
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Lisa Bart

Quizplus · Accepted Answer

Lisa sells the stock to Bart at a loss of $2,000 ($8,000 - $10,000). Since Bart sells the stock a year later for $12,000, he has a gain of $4,000 ($12,000 - $8,000). However, since Bart purchased the stock from Lisa at a loss, his basis in the stock is also $8,000. Therefore, there is no gain or loss for Bart. Similarly, since Lisa sold the stock at a loss, she cannot claim any gain or loss for tax purposes. Thus, the tax consequences for both Lisa and Bart are no gain or loss (Option C).

Lisa Sells Some Stock She Purchased Several Years Ago for $10,000