Paul sold TLC stock valued at $22,000 to his son, Sam, for $12,000. Pau\'s bani
ID: 2602721 • Letter: P
Question
Paul sold TLC stock valued at $22,000 to his son, Sam, for $12,000. Pau's bani following is correct? O Paul reports a gift of $22,000 on Form 709 and a capital loss of $10,000 ($12 in the stock basis in the stock is $12,000. No reporting is required because the transfer was between immediate family members Paul is not required to report the $10,000 gift($22,000-$12,000) and is not allowed to deduct the $5000 oss ($12 $17,000 basis). If Sam sells the stock, his basis for gain is $17,000 and his basis for loss is $12.000. is in the stock is $17.000. Whic $12.000-$22 $17 O $22.000) on Form 1040. Sam's O Paul reports a gift of $22.000. Sam's basis in the stock is $12,000.Explanation / Answer
Ans is c paul is not required to report the $10,000 gift and is not allowed to deduct the $5,000 loss. If Sam sells the his basic for gain is $17,000 and his basic is $12,000
Explanation: Since Paul has sold the stock for $12,000 to his son, so it cant be said that gift is $22,000 . so option 1 and 4 is wrong, in the same way transfer of stock requires a reporting , and option 2 is saying no eporting at all, so this is also wrong. Only left with option c, since gift is only $10,000 and need not to be reported along wth loss of $5000 is also disallowed in hands of paul.