Question

#9) On December 15, 2018 Ralph gave his daughter, Barbara, stock that he acquired on December 13, 2016 that an adjusted basis to Ralph of $8,000 and a fair market value on the date of the transfer of $6,000). Ralph paid a gift tax attributable to this transfer. Barbara sold the stock on June 19, 2019 for $10,000. How much was Barbara’s recognized gain and the character of the gain?

Group of answer choices

a-$2,000 long-term capital gain

b-$4,000 ordinary income

c-$4,000 short-term capital gain

d-We need to know the amount of the gift tax paid by Ralph in order to answer this question.

Please show calculations. Thanks.

Answer 1

Answer So as per the given data Adjusted basis of stock as 8000 cl to ralph de tal market value diddo 6000 [transfer date ] value so as we can see that the ta of stock on transfer date as less than & ruooo there will be no gift tax applicables [taxable rules] now calculation of capital gain or loss Barbara sale consideration Adjusted basis o Ralph $10000 on $ 8000 less E $ 2000 > Grain The gain obtained is short rom Capital gain so as there is no option of short ham gain we can use cd) here.