Question

Paul sold TLC Stock valued at $ 22 000 to his son, sam, for $12000. Pau's basis in the stock is $1700. Which of the following is correct?

A. Paul report a gift of $22000 on form 709 and a capital loss of $ 10000 (12000-$22000) on form 1040 Sam's basis in the stock is $12000

B. No reporting is required because the transfer was between immediate family members.

C. Paul is not required to report the $10000 gift ($22000-$12000) and is not allowed to deduct the $5000 loss ($12000-$17000 basis). If Sam sells the stock, his basis for gain is$17000 and his basis for loss is $12000.

D. Paul report a gift of $22000. Sam's basis in the stock is $12000

Answer 1

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