AICPA CPA-Regulation Exam - Topic 2 Question 43 Discussion

Actual exam question for AICPA's CPA-Regulation exam

Question #: 43
Topic #: 2

Farr made a gift of stock to her child, Pat. At the date of gift, Farr's stock basis was $10,000 and the stock's fair market value was $15,000. No gift taxes were paid. What is Pat's basis in the stock for computing gain?

A$0

B$5,000

C$10,000

D$15,000

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. Property acquired as a gift generally retains the rollover cost basis as it had in the hands of the donor at the time of the gift. Basis is increased by any gift tax paid that is attributable to the net appreciation in the value of the gift. Since there were no gift taxes paid, Pat's basis for computing a gain is the rollover cost (basis), $10,000.

Choices 'a', 'b', and 'd' are incorrect, per the Explanation: above.

by Glory at May 05, 2022, 09:29 PM

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Delfina

4 months ago

But what if there were gift taxes? Would that change anything?

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Iluminada

4 months ago

Nope, no surprise here. It's all about the donor's basis.

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Johnetta

4 months ago

Wait, so Pat doesn't get the fair market value? That's surprising!

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Benton

4 months ago

I agree, it's definitely $10,000!

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Nan

5 months ago

Pat's basis is $10,000. That's the donor's basis.

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Luis

5 months ago

I feel pretty confident about this question. The details about the project closure notification seem clear, so I'll focus on evaluating whether the proposed approach is appropriate.

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Catarina

5 months ago

I'm a bit confused on the difference between ECDSA and ECDHE. I'll have to review my notes on elliptic curve cryptography before answering this.

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Cyndy

5 months ago

Whew, this is a lot to unpack. Stakeholder analysis can get pretty complex, with all the different groups and their competing priorities. I'll need to really focus on picking out the statements that best describe the purpose and value of conducting this type of analysis.

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Kallie

5 months ago

Hmm, this question seems a bit tricky. I'll need to think carefully about the differences between Truffle-Contract and Web3.js before I can decide on the best approach.

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Regenia

5 months ago

Wait, was it 4ms or 6ms? I'm a bit confused on the specifics here. I'll have to make an educated guess.

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