Larry gives Linda 300 shares of stock he had purchased several years ago for $8,000. On the date of the gift, the stock has a fair market value of $6,000. Linda sells the 300 shares for $5,500 one month after the gift, Linda realizes a

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Linda's basis in the stock is the lower of Larry's original cost ($8,000) or the fair market value at the time of the gift ($6,000). Since she sells it for $5,500, she realizes a $500 short-term capital loss ($6,000 - $5,500).

Larry Gives Linda 300 Shares of Stock He Had Purchased