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tekilochka [14]
2 years ago
8

On June 1, 2015 Heloise gave Henrietta a gift of stock worth $10,000. Heloise had purchased the stock on January 1, 2015 for $13

,000. Henrietta sold the stock to an unrelated party on January 1, 2016 for $13,500. What is the amount and character of Henrietta's gain or loss upon the sale?
Business
1 answer:
padilas [110]2 years ago
3 0

Answer:

$500 short-term capital gain

Explanation:

Henrietta's gain = selling price - stock's basis = $13,500 - $13,000 = $500

Since Henrietta received the stocks on June 1, 2015, and sold them on January 1, 2016, only 7 months had passed, therefore, this transaction would be considered a short term capital gain.

When a gift is sold (in this case the stocks), a taxpayer can use the basis for computing gains. If the stocks were sold at a loss, Henrietta should use the lower value (at the moment of the gift) to determine her loss.

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