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)
B)
C)
D)
A)
The stock transfer has no tax consequences because it is a property settlement. Rosa's basis in the stock is $55,000, the carryover basis from Clint. Thus, her gain on the sale is $20,000 ($75,000 - $55,000).
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