Question

Ralph gives his daughter, Angela, stock (basis of $8,000; fair market value of $6,000). If Angela subsequently sells the stock for $10,000, what is her recognized gain or loss

Answer 1

Answer: $2000

Explanation:

From the question, we are informed that Ralph gives his daughter, Angela, stock (basis of $8,000; fair market value of $6,000) and that Angela subsequently sells the stock for $10,000.

The realized gain or loss will be calculated as:

Sale value of stock = $10,000

Basis of stock = $8000

Realized gain will then be:

= $10,000 - $8,000

= $2000