Sadie sold 11 shares of stock to her brother, George, for $570 16 months ago. Sadie had purchased the stock for $740 two years earlier. If George sells the stock for $910, what are the amount and character of his recognized gain or loss in the current year?

Question

Quizplus · Accepted Answer

To calculate the gain or loss, we first need to determine the basis of the stock for George.

Sadie sold the stock to George for $570, which becomes George's basis in the stock.

When George sells the stock for $910, he has a capital gain of $340.

Since George held the stock for more than one year, this gain is considered a long-term capital gain.

Therefore, the amount and character of George's recognized gain is $340 long-term capital gain.

Option C is the correct answer.

Sadie Sold 11 Shares of Stock to Her Brother, George