Amal gave his sister,Dora,100 shares of stock on April 3,2015.Amal originally paid $3,100 for the stock on January 5,2015.At the date of the gift,the fair market value of the stock was $2,800.If no gift tax is paid and Dora sells the stock for $2,700 on August 31,2016,she will recognize:

Question

Quizplus · Accepted Answer

Since Amal's original cost basis was $3,100 and Dora received the stock as a gift, she takes the carryover basis from Amal, which means her cost basis becomes $3,100 as well. When Dora sells the stock for $2,700, she will have a long-term capital loss of $400 ($2,700 sale price - $3,100 cost basis). Therefore, the correct answer is B) a long-term loss.

Amal Gave His Sister,Dora,100 Shares of Stock on April 3,2015