American College Exam HS330 Topic 1 Question 85 Discussion

Actual exam question for American College's HS330 exam

Question #: 85
Topic #: 1

A father bought stock for $100,000 and gave it to his son when it was worth $300,000. The father paid no gift tax on the transfer. When the son sold the property 2 years after the gift, his income tax basis was

B$100,000

C$200,000

D$300,000

Show Suggested Answer

Suggested Answer: D

by Emilio at Apr 25, 2024, 09:12 PM

Limited Time Offer

25%

Off

Get Premium HS330 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Arthur

3 months ago

Haha, this is a tricky one. I bet the IRS would love to get their hands on that extra $200,000 in taxes. Better go with D just to be safe.

upvoted 0 times

...

Emmett

3 months ago

Wait, what? If the father paid no gift tax, then the son's basis should be the full $300,000. D is the right answer here.

upvoted 0 times

Kenny

3 months ago

No, the son's basis should be the full $300,000 in this case.

upvoted 0 times

...

Afton

3 months ago

But wouldn't the son's basis be $0 since the father paid no gift tax?

upvoted 0 times

...

Marylin

3 months ago

I think the answer is D) $300,000.

upvoted 0 times

...

Hannah

4 months ago

Hmm, I'm not so sure. Doesn't the son inherit the full market value as the basis when it's gifted? I'll go with D.

upvoted 0 times

Evette

3 months ago

D) $300,000

upvoted 0 times

...

Aliza

4 months ago

A) 0

upvoted 0 times

...

Filiberto

4 months ago

I agree, the son's income tax basis should be $300,000.

upvoted 0 times

...

Galen

4 months ago

Oh, I think the answer is B. The basis is the original cost to the father, which was $100,000.

upvoted 0 times

Phil

3 months ago

I agree with you, it's D. The basis is the fair market value at the time of the gift, which was $300,000.

upvoted 0 times

...

Lou

3 months ago

I'm pretty sure it's D. The basis is the fair market value at the time of the gift, which was $300,000.

upvoted 0 times

...

Dion

3 months ago

No, I believe the answer is C. The basis is the fair market value at the time of the gift, which was $300,000.

upvoted 0 times

...

Shawnta

4 months ago

I think the answer is B. The basis is the original cost to the father, which was $100,000.

upvoted 0 times

...

Chana

4 months ago

I believe it was $300,000 since that was the value when he received it.

upvoted 0 times

...

Aliza

5 months ago

What do you think the son's income tax basis was?

upvoted 0 times

...