Stock owned by an aunt is sold to her nephew. The aunt's adjusted basis of the stock is $35,000. She sells the stock to her nephew for $30,000. The nephew later sells the stock to an unrelated party for $27,000. What is the gain/loss recognized by the nephew? a. His basis is $30,000. He sold it for $27,000. He recognizes a loss of $3,000. b. Because of the related party rules, he must use the aunt's basis of $35,000, resulting in a $8,000 loss. c. He takes the aunt's basis in the stock and recognizes a $5,000 gain. d. The nephew's basis is $30,000, and he recognizes a $3,000 loss.
Stock owned by an aunt is sold to her nephew. The aunt's adjusted basis of the stock is $35,000. She sells the stock to her nephew for $30,000. The nephew later sells the stock to an unrelated party for $27,000. What is the gain/loss recognized by the nephew? a. His basis is $30,000. He sold it for $27,000. He recognizes a loss of $3,000. b. Because of the related party rules, he must use the aunt's basis of $35,000, resulting in a $8,000 loss. c. He takes the aunt's basis in the stock and recognizes a $5,000 gain. d. The nephew's basis is $30,000, and he recognizes a $3,000 loss.
Chapter19: Family Tax Planning
Section: Chapter Questions
Problem 8DQ
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Please giev me correct option for this general accounting question
Transcribed Image Text:Stock owned by an aunt is sold to her nephew. The aunt's adjusted basis of the
stock is $35,000. She sells the stock to her nephew for $30,000. The nephew
later sells the stock to an unrelated party for $27,000. What is the gain/loss
recognized by the nephew?
a. His basis is $30,000. He sold it for $27,000. He recognizes a loss of $3,000.
b. Because of the related party rules, he must use the aunt's basis of $35,000,
resulting in a $8,000 loss.
c. He takes the aunt's basis in the stock and recognizes a $5,000 gain.
d. The nephew's basis is $30,000, and he recognizes a $3,000 loss.
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