In Addition to Other Gifts,Megan Made a Gift of Stock

question 152

Multiple Choice

In addition to other gifts,Megan made a gift of stock to Jeri in 1975.Megan had purchased the stock in 1973 for $5,000.At the time of the gift,the stock was worth $7,500.If Megan paid $360 of gift tax on the transaction in 1975,what is Jeri's gain basis for the stock?

• A)$5,000.
• B)$5,120.
• C)$5,360.
• D)$7,860.
• E)None of the above.

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Definitions:

Journalizing

The process of recording a transaction in the journal.

Adjustments and Closing Entries

The journal entries made at the end of an accounting period to allocate income and expenditures to the appropriate periods.

Ledger

A book or database in which financial transactions are recorded, organized by account.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, thereby resetting the temporary accounts for the next period.