Tracy Gave Stock with an Adjusted Basis of $18,000 and an FMV

question 88

Multiple Choice

Tracy gave stock with an adjusted basis of $18,000 and an FMV of $15,000 to her nephew Phil. No gift tax was paid. Phil sold the stock for $16,000. The gain or loss Phil will recognize on the sale is

• A)$1,000 gain.
• B)$0.
• C)$1,500 loss.
• D)none of the above

---

Definitions:

Business Risk

The equity risk that comes from the nature of the firm’s operating activities.

Financial Policy

Strategic decisions regarding a company's financial management, including borrowing, spending, and investing.

Target Capital Structure

The optimal mix of debt, equity, and other financing sources that a company aims to maintain to finance its operations and growth.

Total Value

The complete worth of an asset, business, or investment, taking into account all forms of value including monetary, strategic, and intrinsic.