Norman received shares of stock as a gift from his uncle in 2015.At the time of the gift,the stock had a FMV of $5,000.The uncle purchased the stock in 2013 and had a basis of $6,000.If Norman sells the stock for $7,000 in 2017,he will report a:

Question

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Norman will report a $1,000 capital gain because the sale price ($7,000) minus the uncle's basis ($6,000) equals a $1,000 gain. Since it involves the sale of stock, it is considered a capital gain, not ordinary income.

Norman Received Shares of Stock as a Gift from His