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

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Definitions:

Pyroclastic Flow

A fast-moving current of hot gas and volcanic materials that flows down the slopes of a volcano during an explosive eruption.

Eruption Column

A cloud of hot volcanic ash and gas ejected into the atmosphere during an explosive volcanic eruption.

Viscous Lava

Lava that is thick and slow-moving due to its high silica content.

Volcanic Ash

Fine particles of rock and volcanic glass created during explosive volcanic eruptions.