Sonya inherits 1,000 shares of Big Red Airline Corporation stock from the estate of her Uncle Tony. Tony died on August 4, 2018. The stock's value on August 4, 2018, is $2,000. Tony purchased the stock for $3,000 several years ago. Sonya sells the 1,000 shares for $2,300 on December 8, 2018. What is Sonya's holding period of the stock?

Question

Quizplus · Accepted Answer

Sonya inherited the stock from her Uncle Tony, therefore the holding period of the stock is determined by the date of Tony's purchase. Since several years have passed between the purchase and the sale of the stock, it falls under long-term capital gains. The value of the stock on the day Sonya inherited it or sold it is not relevant for determining the holding period. The payment of estate tax is also not relevant for determining the holding period.

Sonya Inherits 1,000 Shares of Big Red Airline Corporation Stock