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T-7. On December 15, 2018 Ralph gave his daughter, Barbara, stock that had an adjusted basis...

T-7. On December 15, 2018 Ralph gave his daughter, Barbara, stock that had an adjusted basis to Ralph of $8,000 and a fair market value on the date of the transfer of $6,000). Ralph paid a gift tax attributable to this transfer. Barbara sold the stock on June 19, 2019 for $10,000. How much was Barbara’s recognized gain and the character of the gain?

  

a.             $2,000 long-term capital gain

b.             $4,000 ordinary income

c.             $4,000 short-term capital gain

  

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Answer #1

Answer:- c

According to relevant section,a person should have to pay tax on gains from sale of gifted properties.

As this stock has been sold before one year it is treated as capital gain.

Taxable amount=Sales amount -FMV(fair market value) at the time of purchase

=10000$-6000$

=4000$

  

  

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