Nick received a gift of stock from his father. Nick's father had purchased the stock 2 years earlier and his father's basis in the stock was $30,000 . On the date of the gift, the stock had a fair market value of $25,000
a. If Nick sells the stock for $33,000, calculate the amount of Nick's gain or loss on the transaction.
b. If Nick sells the stock for $22,000, calculate the amount of Nick's gain or loss on the transaction.
c. If Nick sells the stock for $27,000, calculate the amount of Nick's gain or loss on the transaction.
a. $3,000 gain = $33,000 - $30,000.
b. $3,000 loss = $22,000 - $25,000.
c. $0 . No gain or loss is recognized since the property is sold at a price that falls between the donor's basis for gain and basis for loss.
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