Question

Melvin receives stock as a gift from his uncle. No gift tax is paid. The adjusted basis of the stock is $30,000 and the fair market value is $38,000. Melvin trades the stock for bonds with a fair market value of $35,000 and $3,000 cash. What is his recognized gain and the basis for the bonds?

Answer 1

The gain of $8,000 is recognized and the bonds have a basis of $35,000

Step-by-step explanation:

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