On July 25, 2017, Karen Gives Stock with a FMV

question 1695

Multiple Choice

On July 25, 2017, 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, 2017. Bill sold the stock on April 18, 2018 for $6,000. As a result of the sale, what must Bill report on his 2018 tax return?

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

---

Definitions:

Compounded Monthly

The method of accruing interest on the initial amount of a loan or deposit, thereby earning interest on the accrued interest, on a monthly basis.

12%

A numerical value representing twelve parts per hundred, often used to denote a percentage rate, such as an interest rate or growth rate.

7 Years

A time period of seven years, often used in the context of loans, investments, or tenure.

Compounded Monthly

An interest calculation method where interest is added to the principal balance monthly, causing the subsequent interest to be based on the new, higher balance.