The taxpayer owns stock with an adjusted basis of $15,000 and a fair market value of $8,000.If the stock or cash is going to be given to her niece, it is preferable for the taxpayer to sell the stock and give the $8,000 cash to her niece.

Question

Quizplus · Accepted Answer

Selling the stock allows the taxpayer to realize a capital loss, which can be used to offset other capital gains or up to $3,000 of ordinary income, providing a tax benefit. Giving the stock directly would not realize the loss.

The Taxpayer Owns Stock with an Adjusted Basis of $15,000