What are the tax consequences to Merle and Ned? Would Ned recognize any gain if he sold the stock for $41,000?

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
Publisher:Maloney
Chapter13: Property Transact Ions: Determination Of Gain Or Loss, Basis Considerations, And Nontaxable Exchanges
Section: Chapter Questions
Problem 69P
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On January 15 of the current taxable year, Merle sold stock with a cost of $40,000 to his brother Ned for $25,000, its fair market value. On June 21, Ned sold the stock to a friend for $26,000.

 

  1. What are the tax consequences to Merle and Ned?
  2. Would Ned recognize any gain if he sold the stock for $41,000?
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