Donald sells stock with an adjusted basis of $38,000 to his son, Kiefer, for its fair market value of $30,000. Kiefer sells the stock three years later for $32,000. Kiefer will recognize a gain on the subsequent sale of

Possible options are:

A) $0.

B) $2,000.

C) ($6,000).

D) ($8,000).

Answer is A) $0

Explanation:

Selling Price $32,000

Minus: Cost (30,000)

Gain $2,000

Minus: Previously disallowed loss ($30,000 - $38,000) ( 2,000)

Taxable gain $ 0

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