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Holding period and gain to Rita for gift of stock from Che

Che acquires 50 shares of Blue Corporation stock on November 1, 2006, for $43,000. On May 10, 2007, when the stock is worth $56,000, Che transfers the shares to Rita, his daughter, as a gift on her 21st birthday. No gift tax is paid by Che. On August 10, 2007, Rita sells the shares for $59,000 to get cash for her college tuition. What are Rita's holding period for the stock and the nature of her gain or loss from its sale?

Solution Preview

Rita takes the basis and the holding period of the donor.

Amount of Gain:
Sale $59,000
Cost $43,000
Gain $16,000

Nature of Gain:
Sale ...

Solution Summary

The solution shows the calculation for the transaction and explains the holding period. Also explained is an exception to the standard gift rules for a special circumstance.