Josephine gave her son,Shane 700 shares of Creative Marketing Inc. ,common stock on May 26,2016.Josephine originally paid $9,000 for the stock on April 15,2016.At the date of the gift,the fair market value of the stock was $8,500.If no gift tax is paid and Shane sells the stock for $5,500 on May 26,2017,he will recognize:

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BShane will recognize a loss because the selling price ($5,500) is less than both the original cost basis ($9,000) and the fair market value at the time of the gift ($8,500). The nature of the loss (short-term or long-term) depends on the holding period. Since the stock was held for more than a year from the original purchase date by Josephine (April 15, 2016) to the sale date by Shane (May 26, 2017), the loss can be considered long-term. However, for tax purposes, the determination of short-term or long-term depends on specific IRS rules regarding gifts and their basis for loss calculation. In this scenario, both options are presented because the specific tax treatment can vary based on additional details not provided in the question.

Josephine Gave Her Son,Shane 700 Shares of Creative Marketing Inc