Padraic purchased 50 shares of stock as an investment for the purchase price of $2,500 in 2014.In 2017 when the fair market value of the stock was $2,500,Padraic gave the stock to his sister,Fiona.If no gift tax is paid and Fiona sells the stock for $2,750 she will recognize:

Question

Quizplus · Accepted Answer

Fiona will recognize a $250 gain, which is the difference between her selling price ($2,750) and the fair market value of the stock when it was gifted to her ($2,500). Since the fair market value at the time of the gift was equal to the purchase price, and no gift tax was paid, the basis for determining gain remains the fair market value at the time of the gift.

Padraic Purchased 50 Shares of Stock as an Investment for the Purchase