Steve Gave Stock with an Adjusted Basis of $7,000 and an FMV

question 41

Multiple Choice

Steve gave stock with an adjusted basis of $7,000 and an FMV of $10,000 to Alice. No gift tax was paid. Later, Alice sold the stock for $12,000. The gain Alice will recognize on the sale is

• A)$5,000.
• B)$2,000.
• C)$0.
• D)none of the above

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Definitions:

Object Permanence

The understanding in human development that objects continue to exist even when they cannot be seen, heard, or touched.

Egocentric

A term referring to the inability or difficulty in understanding a perspective other than one's own.

Formal-Operations

A stage in Piaget's theory of cognitive development, typically beginning around age 12, where individuals start to use abstract and logical thinking.

Concrete-Operations

A stage in Piaget's theory of cognitive development where children gain the ability to think logically about concrete events.