In addition to other gifts,Megan made a gift of stock to Jeri in 1976.Megan had purchased the stock in 1974 for $7,500.At the time of the gift,the stock was worth $20,000.If Megan paid $850 of gift tax on the transaction in 1976,what is Jeri's gain basis for the stock?

Question

Quizplus · Accepted Answer

Because the gift occurred prior to 1977,all of the gift tax paid of $850 is added to Megan's adjusted basis of $7,500.Thus,Jeri's adjusted basis is $8,350 ($7,500 + $850).

In Addition to Other Gifts,Megan Made a Gift of Stock