On July 25,2013,Marilyn gives stock with a FMV of $7,500 and a basis of $5,000 to her nephew Darryl.Marilyn had purchased the stock on March 18,2013.Darryl sold the stock on April 18,2014 for $7,800.As a result of the sale,what will Darryl report on his 2014 tax return?

Question

Quizplus · Accepted Answer

Since Marilyn gave the stock to Darryl as a gift, Darryl takes over Marilyn's basis of $5,000. When Darryl sells the stock for $7,800, he realizes a long-term capital gain because he held the stock for more than one year (between July 25, 2013 and April 18, 2014). The amount of the long-term capital gain is $2,800 ($7,800 - $5,000), so the correct answer is D.

On July 25,2013,Marilyn Gives Stock with a FMV of $7,500