On July 25,2013,Karen Gives Stock with a FMV of $7,500

question 47

Multiple Choice

On July 25,2013,Karen gives stock with a FMV of $7,500 and a basis of $8,000 to her nephew Bill.Karen had purchased the stock on March 18,2013. Bill sold the stock on April 18,2014 for $6,000.As a result of the sale,what must Bill report on his 2014 tax return?

• A)($1,500)STCL
• B)($1,500)LTCL
• C)($2,000)STCL
• D)($2,000)LTCL

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Definitions:

Duration Rule

A principle that estimates the sensitivity of a bond's price to changes in interest rates, calculated as the weighted average time until a bond's cash flows are received.

Yield

The income return on an investment, such as the interest or dividends received, expressed annually as a percentage of the investment's cost.

Duration

A measure of the sensitivity of a bond's or fixed income portfolio's price to changes in interest rates, typically expressed in years.

Basis Points

A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equal to 1/100th of 1%.