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?
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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Aug 23rd, 2014
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