Question

Return to questi Several years ago Doug invested $21,750 in stock. This year he gave his daughter Tina the stock on a day it was valued at $20,200. She promptly sold it for $18,400. Assume Doug is not married and does not support Tina, who is 28. 10 Required: points a. Determine the amount of the taxable gift. b. Calculate the amount of taxable gain or loss, if any, for Tina. Answer is complete but not entirely correct. Amount of taxable gift Taxable loss $ 21,750 X $ 1,800 b.

Answer 1

Doug made a current gift of $20,200 and a taxable gift (after application of the $13,000 annual exclusion for 2012) of $7,200. Tina will not recognize any income upon receipt of the stock, and she takes a carryover basis of $21,750 and long-term holding period for income tax purposes. For purposes of calculating a loss, Tina's basis in the stock is limited to the lesser of carryover basis ($21,750) or fair market value on the date of the gift ($20,200). Hence, upon the sale Tina recognizes a loss of $1800(20200-18400).

Amount of taxable gifts = $7,200

Taxable Loss = $1800