Under the terms of their divorce agreement executed in August of this year, Clint transferred Beta, Inc. stock to his former wife, Rosa, as a property settlement. At the time of the transfer, the stock had a basis to Clint of $55,000 and a fair market value of $68,000. Rosa subsequently sold the stock for $75,000. What is the tax consequence of first the stock transfer and then the stock sale to Rosa?
A.
| Rosa's Income From Stock Transfer | Rosa's Income From Stock Sale |
| $0 | $7,000 capital gain |
B.
| Rosa's Income From Stock Transfer | Rosa's Income From Stock Sale |
| $13,000 | $7,000 capital gain |
C.
| Rosa's Income From Stock Transfer | Rosa's Income From Stock Sale |
| $13,000 | $20,000 capital gain |
D.
| Rosa's Income From Stock Transfer | Rosa's Income From Stock Sale |
| $0 | $20,000 capital gain |
Answer: D
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