Dunn received 100 shares of stock as a gift from Dunn's grandparent. The stock cost Dunn's grandparent $32,000, and it was worth $27,000 at the time of the transfer to Dunn. Dunn sold the stock for $29,000. What amount of gain or loss should Dunn report from the sale of the stock?

Question

Myles Ayala

Business

12 September, 00:19

Dunn received 100 shares of stock as a gift from Dunn's grandparent. The stock cost Dunn's grandparent $32,000, and it was worth $27,000 at the time of the transfer to Dunn. Dunn sold the stock for $29,000. What amount of gain or loss should Dunn report from the sale of the stock?

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Answers (1)

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Anya Lowe · Answer 1

The amount of gain or loss that DUNN should report is $0.

Explanation:

Here we have to take out what would be the gain or loss for Dunn when he sells the stock given to him as a gift by his grandparents. Here we have to clear out what would be the Dunn basis for gain or loss, so that we can tell whether he earned a gain or loss.

For Dunn to take out the basis for gain would be similar to the donors (in this case his grandparents) basis for gain which is $32,000 AND Dunn has sold the stock for $29,000, so he definitely hasn't made the gain.

For Dunn to take out the basis for loss, he will suffer loss when if the amount at which he sells the stock is less than the amount which was at the date of transfer of stock $27,000, and as it is given he sells the stock at $29,000, which is more than $27,000, so he definitely hasn't suffered loss also.

Thus we can say that he has neither suffered loss nor earn a gain.