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When he died on April 14, 2011, Joe owned 5,000...

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When he died on April 14, 2011, Joe owned 5,000 shares of XYZ corporation. XYZ was listed on the New York Stock Exchange and on April 14, 2011, the stock had a fair market value of $3 per share . On October 14, 2011 the stock had a fair market value of $4 per share. Joe had purchased the stock on November 16, 2010 for $2 per share and that was his per share basis when he died. Joe?s gross estate was not large enough to require the filing of a federal estate tax return. Joe, in his will, left the sum of $5,000 to his brother, Bill. Pursuant to authority granted in the will, Joe?s executor distributed 1,000 shares of XYZ stock to Bill in satisfaction of the bequest and on the date of distribution the fair market value of the stock was $5 per shares. As a result of this transaction a. Bill has a basis in the 1,000 shares of $2,000. b. The estate realizes and must recognize a long term capital gain of $2,000. c. Bill has a basis in the shares of $4,000. d. The estate realizes and must recognize a short term capital gain of $1,000. e. Bill has a basis in the shares of $3,000.

 

Paper#7679 | Written in 18-Jul-2015

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