Business Finance
4. David purchased stock in Zoll Corporation in 1985 for $6,000. On April 16

Question Description

4.   David purchased stock in Zoll Corporation in 1985 for $6,000.  On April 16, 2013 he gifted the stock to his daughter Susan; at the time of the gift, the Zoll stock was valued at $250,000.  Susan sold the stock the next month for $ 252,000.  What is Susan's gain or loss and what is the character of the gain or loss?

Final Answer

The basis of Donor will be taken for the purpose of tax as the fair value of stock at the time of giving gift i.e. $250,000 is more than the donor’s basis i.e. $ 6,000. Therefore the capital gain for Susan will be $ 252,000 less $ 6,000 = $ 246,000. This treatment is as per Code 550 of U.S. Tax Code.


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