Lydia purchased a sapphire bracelet for $3,000 while vacationing in Hong Kong during 2006. Lydia gives the bracelet to her daughter Amy when she graduates from college in 2018. The bracelet is appraised at $8,000 on that date. In October 2018, Amy sells the bracelet for $9,000. How is Amy's holding period for the bracelet determined?

Question

Quizplus · Accepted Answer

Amy's holding period for the bracelet includes the time Lydia owned it, because it was a gift and Amy's basis for determining gain is the donor's basis. Since the donor's basis is used, the holding period starts from when the donor acquired the property, which was in 2006.

Lydia Purchased a Sapphire Bracelet for $3,000 While Vacationing in Hong