In 2009,Terri purchased 260 shares of Flowers R Us stock at a cost of $9,600 as an investment.In 2014,when the fair market value was $11,400,Terri gave the stock to her daughter,Michele.Assuming no gift tax was paid,if Michele sells the stock for $13,800,she will recognize:

Question

Quizplus · Accepted Answer

Michele's basis in the stock is the same as Terri's original cost basis of $9,600 because no gift tax was paid. When Michele sells the stock for $13,800, the gain is calculated as $13,800 (sale price) - $9,600 (basis) = $4,200 gain.

In 2009,Terri Purchased 260 Shares of Flowers R Us Stock