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

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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.

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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.

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Kenny

2 months ago

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

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Afton

2 months ago

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

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Marylin

3 months ago

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

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Hannah

3 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.

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Evette

3 months ago

D) $300,000

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Aliza

3 months ago

A) 0

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Filiberto

4 months ago

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

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Galen

4 months ago

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

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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.

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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.

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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.

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Shawnta

3 months ago

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

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Chana

4 months ago

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

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Aliza

4 months ago

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

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