Under the terms of their divorce agreement executed in August of this year,Clint transferred Beta,Inc.stock to his former wife,Rosa,as a property settlement.At the time of the transfer,the stock had a basis to Clint of $55,000 and a fair market value of $68,000.Rosa subsequently sold the stock for $75,000.What is the tax consequence of first the stock transfer and then the stock sale to Rosa?

Question

Quizplus · Accepted Answer

A)The stock transfer has no tax consequences because it is a property settlement.Rosa's basis in the stock is $55,000,the carryover basis from Clint.Thus,her gain on the sale is $20,000 ($75,000 - $55,000).

Under the Terms of Their Divorce Agreement Executed in August