Phil's father died on January 10, 2017 . The father had owned stock for 20 years with a basis of $45,000 that was transferred to Phil as a gift on August 10, 2016, when the stock was worth $430,000 . His father paid no gift taxes. This stock was worth
$566,000 at the date of the father's death. Phil sold the stock for $545,000 net of commissions on February 23, 2017 . What is the amount and nature of Phil's gain or loss from disposition of this property?
Phil had a tax basis for the stock equal to its $45,000 basis at the date of his father's gift of the stock. He also had a long-term holding period because the father's 20-year holding period is added to Phil's holding period. Consequently, he had a $500,000 ($545,000 – $45,000) long-term capital gain when he sold the stock.
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