Question

A beneficiary acquired stock from a decedent. The stock's fair market value at the date of the decedent's death was $500,000. The decedent had paid $280,000 for the stock six years ago. The beneficiary sold the stock two months after receipt for $510,000. What is the beneficiary's recognized gain for the year related to the stock?

Answer 1

Beneficiary recognized gain is $510000.

Step-by-step explanation:

The amount paid by the decedent for the stock = $280000

The market value of the stock at the time of death = $500000

The selling price or the amount received by the beneficiary by the sell of stock = $510000

Since the recognized gain is calculated by subtracting the amount paid by the person to buy the stock from the amount that he receives from the sale of stock. But in this case, the beneficiary pays zero for the stock but gets all the money after selling.

Beneficiary recognized gain = amount received from the sell – the amount paid by the beneficiary.

= $510000 – 0

= $510000