Jordan purchased 50 shares of Walsh Co. stock three years ago for $1,000. Jordan recently gifted the stock to her brother, Colin. On the date of the gift, the stock had a fair market value of $750. Six months after receiving the stock from Jordan, Colin decides to sell the stock. Which of the following statements is correct? Question options: If Colin sells the stock for $700, he will have a long-term capital loss. If Colin sells the stock for $1,100, he will have a short-term capital gain If Colin sells the stock for $675, he will have a short-term capital loss. If Colin sells the stock for $800, he will have a long-term capital gain.

Question

Business

Tianna Adams

23 March, 12:17

Jordan purchased 50 shares of Walsh Co. stock three years ago for $1,000. Jordan recently gifted the stock to her brother, Colin. On the date of the gift, the stock had a fair market value of $750. Six months after receiving the stock from Jordan, Colin decides to sell the stock. Which of the following statements is correct? Question options: If Colin sells the stock for $700, he will have a long-term capital loss. If Colin sells the stock for $1,100, he will have a short-term capital gain If Colin sells the stock for $675, he will have a short-term capital loss. If Colin sells the stock for $800, he will have a long-term capital gain.

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Answers (1)

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Tamara Heath · Answer 1

If Colin sells the stock for $675, he will have a short-term capital loss.

Explanation:

The cost of acquisition for the transferee will be stated as the fair market value as on the date of the transfer. if the shares are further sold at $675, then he shall be liable for the short-term capital loss.