Kevin purchased 5,000 shares of Purple Corporation common stock at $10 per share

Question

Kevin purchased 5,000 shares of Purple Corporation common stock at $10 per share. Two years later, he receives a nontaxable stock dividend of 250 shares of Purple Corporation common stock. At that time, the et value of $12.50 per share. What is the total basis of the Purple Corporation stock and the per share basis? $50,000 total basis in stock, $10 basis per share for the original stock and $0 basis per share for the dividend $50,000 total basis in stock. $9.52 basis per share Ralph gives his daughter, Angela, stock. His basis in the stock was $8,000. The fair market value of the market value of the stock at the time of the gift was $6,000. No gift tax is paid. If Angela subsequently sells the stock for $10,000, What is her recognized gain? Melody makes a gift to her niece of a machine to use in her business with a fair market value of $8,500 and a basis in Melody's hands of $9,500. What is the niece's basis for depreciation (cost recovery)

Explanation / Answer

15.        Total Share Basis is Unchanged that is $50000

            The per share basis is $50000/(5000+250)= 9.52

           So the Answer is Option b. $50000 total Basis in stock, 9.52 basis per share

16. As Angela sells the stock more than Ralph(donor) Basis, the Ralph basis should consider to determine the gain

                                    Gain = $10000-$8000=$2000

So the Answer is Option b.$2000

17.If a property acquire by gift the depreciable basis is the same as the donor’s basis at the time of gift

            So the answer is Option d.$9500                       

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