In 2007,Savannah purchased 200 shares of Hi-Style stock as an investment.The stock cost $17,000.In 2016 when the fair market value was $19,000,Savannah gave the stock to her daughter,Daniele.If no gift tax is paid and Daniele sells the stock for $20,000,she will recognize:
A)a $3,000 gain.
B)no gain or loss.
C)a $1,000 gain.
D)a $2,000 gain.

Question

Quizplus · Accepted Answer

Daniele's basis in the stock is the same as Savannah's original cost basis of $17,000 because no gift tax was paid. When Daniele sells the stock for $20,000, she recognizes a gain of $3,000 ($20,000 - $17,000).

In 2007,Savannah Purchased 200 Shares of Hi-Style Stock as an Investment.The