Maya gifted 5,000 shares of Z corporation a public company, that originally cost $15 to her spouse. At the time of the gift the fair market value (FMV) of the shares was $25 each. The shares paid dividends of $1,000. What amount must Maya include in her income, assuming no elections are filed?

Taxable capital gain of $25,000 and a taxable dividend of $1,380 due attribution on the dividend

$0 taxable capital gains, but the taxable dividend of $1,380 is attributed back to Maya

$0, the transfer is at cost

$0 taxable capital gains, but the taxable dividend of $1,150 is attributed back to Maya

Taxable capital gain of $25,000 and no attribution on the dividend

Answer rating: 100% (QA)

Maya must include the fair market value FMV of the gifted shares in her income for tax purposes S... View the full answer