In 2014,Linda gave her son,Jonathan 425 shares of School Products,Inc.common stock.Linda paid $8,350 for the stock in 2008.At the date of the gift,the FMV of the stock was $5,800.Assuming that there is no gift tax paid,if Jonathan sells the stock for $5,000,he will recognize:

Question

Quizplus · Accepted Answer

Jonathan's basis for determining loss is the lower of the donor's adjusted basis ($8,350) or the FMV at the time of the gift ($5,800). Since he sells it for $5,000, the loss is $5,800 - $5,000 = $800.

In 2014,Linda Gave Her Son,Jonathan 425 Shares of School Products,Inc