Sheila sells stock, which has a basis of $12,000, to her daughter for $7,000, the stock's fair market value. Subsequently, the daughter sells the stock to an unrelated party for $5,000. Which of the following is true for Sheila and her daughter?
A.
| Sheila | Daughter |
| recognizes no loss | recognizes loss of $2,000 |
B.
| Sheila | Daughter |
| recognizes loss of $3,000 | recognizes loss of $2,000 |
C.
| Sheila | Daughter |
| recognizes no loss | recognizes loss of $5,000 |
D.
| Sheila | Daughter |
| recognizes loss of $3,000 | recognizes loss of $5,000 |
Answer: A
Business
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