The Federal Express stock was a gift to Nicholas from his Uncle Frank. On the date of
Question:
The Federal Express stock was a gift to Nicholas from his Uncle Frank. On the date of the gift July 1, 2003), the fair market value of the stock was $3,500. Uncle Frank's tax basis was $2,500, and he paid gift tax of $1,400 on the gift.
Assuming that Nicholas and Whitney decide to sell the Federal Express stock on January 15, 2022, for a total price of $7,029, what is the long term capital gain that will be taxed on the sale?
Hint: Since gift tax was paid you need to adjust the basis using the formula:
Donor's basis + (Appreciation/Fair market value at date of gift )*(gift tax paid Appreciation is how much it appreciated when Uncle Frank owned it.
South Western Federal Taxation 2017 Comprehensive
ISBN: 9781305874169
40th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young