ation stock from his uncle as a gift on July 20, 2016, when the stock had a $280
ID: 2537450 • Letter: A
Question
ation stock from his uncle as a gift on July 20, 2016, when the stock had a $280,000 FMV. His uncle paid $200,000 for the stock on April 12, 2001. The taxable gift was $280,000, because his undle made another gift to Buck for $35,000 in January and used the annual exclusion. The the transactions below, Buck's AGI is $35,000 in 2017. No other transactions involving capital assets occur during the year AGI prior to sale of stock + Gain (loss) on sale of stock AGI Requirement AGI in each case. (Do not round intermediary calculations. Only round the amounts you input in the cells to the nearest dollar. Use a minus sign or parentheses to enter a loss.) a. He sells the stock on October 12, 2017, for $286,000 b. He sells the stock on October 12, 2017, for $205,600 c. He sells the stock on December 16, 2017, for $274,000 Print Done Enter any number in the edit fields and then click Check AnswerExplanation / Answer
Answer :
The basis of gifted stock is the lower of fair market value on the date of the gift or the gifter's cost basis plus any gift taxes paid. In this case, cost basis is lower. $200000 + $28000 gift taxes paid gives Buck a basis of $228000.
Since FMV was more than the owner's cost basis, Busk's basis will be the carryover cost basis plus gift taxes regardless of there is a gain or loss on sale of the stock :
Situation A
Gain = $286000 (selling price) - $228000 = $58000
AGI = $58000+ $280000 = $330000
Situation B
Gain = $205600 - $228000 = ($22400)
Deductible loss is $3000 (new limt can be used for which that am not aware) since you can deducted capital loss to 3000 a year.
AGI = $280000 - $3000 = $277000
Part C
Gain = $274000 - $228000 = $36000
AGI = $280000+36000 = $316000
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