Tracy gave stock with an adjusted basis of $18,000 and an FMV of $15,000 to her nephew Phil. No gift tax was paid. Phil sold the stock for $16,000. The gain or loss Phil will recognize on the sale is
A)$1,000 gain.
B)$0.
C)$1,500 loss.
D)none of the above

Question

Quizplus · Accepted Answer

Phil's basis for determining gain is the same as Tracy's adjusted basis ($18,000). Since the sale price ($16,000) is less than the adjusted basis but more than the FMV at the time of the gift, no gain or loss is recognized.

Tracy Gave Stock with an Adjusted Basis of $18,000 and an FMV