medium · Certified Financial Planner Retirement

Quince receives a gift of stock from his father. At the time of the gift, the father's basis was $50,000 and the Fair Market Value (FMV) was $40,000. Quince later sells the stock for $45,000.

What is Quince's recognized gain or loss on this sale?

  1. No gain or loss is recognized.
  2. The loss is disallowed under the Wash Sale rule.
  3. $5,000 gain.
  4. $5,000 loss.

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