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7 February, 04:33

Taxpayer receives stock as a gift from his uncle. The adjusted basis of the stock is $10,000 and the fair market value is $17,000. Taxpayer trades the stock for bonds with a fair market value of $15,000 and $2,000 cash. What are his recognized gain and the basis for the bonds?

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  1. 7 February, 04:53
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    The recognized gain and the basis for the bonds is $7.000

    Explanation:

    Consider the following calculations to obtain the recognized gain

    Taxpayer's recognized gain = Sale value of Stock - Adjusted basis value of stock

    = (15000+2000) - 10000 = $7000
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