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NEW QUESTION: 1
In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. A month later, you notice that the stock is selling for $55 and decide to sell it.
What is the tax consequence of this sale to you?
A. $2,400 taxed as short-term capital gain income
B. $10,800, taxed as long-term capital gain income
C. None of the above is the correct tax consequence of this sale.
D. $3,300, taxed as long-term capital gain income
Answer: D
Explanation:
Explanation/Reference:
Explanation: If you sell Hasbro stock for $55 and it was selling for $44 on the day that your uncle died, the sale will result in $3,300 of taxable income, taxed to you as long-term capital gain income. Your cost basis is the price at which the stock was selling on the day your uncle died, $44, so your gain on the sale is ($55
- $44) x 300 shares = $3,300. Although you owned the stock for only a month, the IRS stipulates that capital gain (or loss) earned on the disposition of inherited investment property will be considered to be long-term capital gain, regardless of how long it is held by the beneficiary prior to its sale.

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