Virginia gave stock with an adjusted basis of $8,000 and an FMV of $10,000 to Carmen. No gift tax was paid on the transfer. Carmen then sold the stock for $9,000. The gain or loss Carmen will recognize on the sale is

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Carmen's basis in the gifted stock is the donor's adjusted basis, which is $8,000, because the stock was sold for more than the adjusted basis but less than the FMV at the time of the gift. Carmen sold the stock for $9,000, resulting in a $1,000 gain ($9,000 - $8,000).

Virginia Gave Stock with an Adjusted Basis of $8,000 and an FMV