Hall, a divorced person and custodian of her 12-year-old child, filed her Year 9

Question

Hall, a divorced person and custodian of her 12-year-old child, filed her Year 9 federal income tax return as head of household. She submitted the following information to the CPA who prepared her Year 9 return:

In June, Year 9, Hall's mother gifted her 100 shares of a listed stock. The donor's basis for this stock, which she bought in Year 1, was $4,000, and market value on the date of the gift was $3,000. Hall sold the stock in July, Year 9 for $3,500. The donor paid no gift tax. What was Hall's reportable gain or loss in Year 9 on the sale of the 100 shares of stock gifted to her? (Points : 4)      

$0
       $500 gain
       $500 loss
       $1,000 loss

Explanation / Answer

Gain /loss = Sale value - Cost in hands of previous owner

                   = 3500 -4000

                    = -500 loss

correct option is "C"

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