Mrs. Beld sold marketable securities with a $79,600 tax basis to her daughter for $60,000 cash. Two years later, the daughter sold the securities through her broker for $93,000. Compute the daughter's gain recognized on sale.

Question

Quizplus · Accepted Answer

The daughter's gain recognized on sale is computed based on the difference between the sale price ($93,000) and her adjusted basis in the securities. Since the securities were purchased from a related party (her mother) at a loss, the daughter's basis for determining loss is the purchase price ($60,000), but her basis for determining gain is the donor's basis ($79,600). Since she sold the securities at a gain, her basis is $79,600. The gain recognized is $93,000 - $79,600 = $13,400.

Mrs Beld Sold Marketable Securities with a $79,600 Tax Basis