Padraic purchased 50 shares of stock as an investment for the purchase price of $1,500 in 2011.In 2014 when the fair market value of the stock was $2,000,Padraic gave the stock to his sister,Fiona.If no gift tax is paid and Fiona sells the stock for $1,750 she will recognize:

Question

Quizplus · Accepted Answer

Fiona's basis in the stock is the same as Padraic's original purchase price of $1,500 because no gift tax was paid. When she sells it for $1,750, she recognizes a gain of $250 ($1,750 - $1,500).

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