On November 15, 2019, Tim, a cash basis taxpayer, gave his Daughter Nancy 1000 shares of JP Morgan common stock, which Tim purchased on June 30, 2015 for $60,000. On the date of the gift the stock was selling on the NY Stock Exchange for $46 per share. On December 03, 2019, the corporation declared a 1 for 1 stock dividend payable on December 10, 2019, to shareholders of record as of November 22, 2019. On January 17, 2020, Nancy sold 1,500 shares of JP Morgan common stock that she received from her father and from the stock dividend for $18 per share. a) What is Nancy’s recognized gain or loss on the sale of the 1,500 shares on January 17, 2020? b) What is Nancy’s total basis in the remaining shares? Explain your answer and show all calculation.

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 68P
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On November 15, 2019, Tim, a cash basis taxpayer, gave his Daughter Nancy 1000 shares of

JP Morgan common stock, which Tim purchased on June 30, 2015 for $60,000. On the date

of the gift the stock was selling on the NY Stock Exchange for $46 per share. On December

03, 2019, the corporation declared a 1 for 1 stock dividend payable on December 10, 2019, to

shareholders of record as of November 22, 2019. On January 17, 2020, Nancy sold 1,500

shares of JP Morgan common stock that she received from her father and from the stock

dividend for $18 per share.

  1. a) What is Nancy’s recognized gain or loss on the sale of the 1,500 shares on January

17, 2020? b) What is Nancy’s total basis in the remaining shares? Explain your answer

and show all calculation.

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