Paula transfers stock to her former spouse, Fred. The transfer is pursuant to a divorce agreement. Paula's cost of the stock was $75,000 and its fair market value on the date of the transfer is $95,000. Fred later sells the stock for $100,000. Fred's recognized gain from the sale of the stock is $5,000.
Answer the following statement true (T) or false (F)
False
Rationale: Fred's basis is $75,000, the same as Paula's basis. So Fred's recognized gain is $25,000 ($100,000 - $75,000).
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