Question

Maxine inherited 100 shares of Klm stock when her mother passed away in June 2019.Maxine mother paid 4000 for the stock when she put in 2018. On the date of death, the stock was valued at 10000. Maxine sold it 6 weeks later for 9600. Maxine has a: a) short term loss of 400:b) short term gain of 5600: c) long term loss of 400: d) long term gain of 5600

Answer 1

Ans) C) long term loss of 400

Cost basis of the inherent stock is the value of stock on date of inheritance. Thus here cost basis = 10000

IRS has specified that irrespective of holding period, profit/loss on Inherent stock will be always be consider as long term gain/loss

Thus here there is loss of 400 which shall be considered as long term loss