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(c.) Since the value of the rights is only 10 percent of the value of the stock, nothing needs to be allocated to the rights. All of the $1,100 in sales proceeds is long-term capital gain. If the taxpayer made the election to allocate an amount to the rights, then $545 would be allocated to the rights as follows: $1,250 × $6,000 = $545$12,500 + $1,250(a.) Betty has $1,800 income (300 × $6). The basis in the rights is $1,800 of $6 per right. The holding 84. period begins on January 11, 2010. (b.) The basis of each new share is $38 ($32 exercise price plus the basis of each right of $6). The holding period begins on the date of exercise, February 19, 2011. On sale of the rights, she has long-term capital gain of $300 ($1,200 less $900 basis) since the rights were held longer than 12 months.Although Joe has a realized loss of $3,000, it is not recognized because he sold it to his brother, a related 85. party. When Tim sells it for $16,000, Tim’s realized gain is $4,000, but he reduces that by the $3,000 disallowed loss to give $1,000 recognized gain.(a.) $7,000 gain ($37,000 - $30,000). 86. (b.) ($5,000) loss ($25,000 - $30,000). (c.) ($2,500) loss ($24,500 - $27,000). (d.) No gain or loss is recognized if the selling price is between the basis in the hands of the donor and a lesser fair market value at the date of the gift.(a.) $200,000, the fair market value at the date of death. 87. (b.) $170,000, the fair market value six months after Brian’s death. (c.) Fair market value at the date of distribution. (d.) $170,000, the fair market value at November 14, 2010. (e.) There is long-term gain on property from a decedent regardless of how long it is held.