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Fred received 200 shares of Georgia Corporation stock from his brother as a gift on

July 20, 2017, when the stock had a $45,000 FMV. His brother paid $30,000 for the stock on April 12, 2002. The taxable gift was $45,000, because his brother made another gift to Fred for $20,000 in January and used the annual exclusion. The brother paid a gift tax of $1,500. Without considering the transactions below, Fred's AGI is $45,000 in 2018. No other transactions involving capital assets occur during the year. Analyze each transaction below, independent of the others, and determine Fred's AGI in each case.

1.   He sells the stock on October 12, 2018, for $48,000.  

Fred's AGI would be $61,500. Find his gain by sale price minus what his brother originally paid minus gift tax ($48,000-$30,000-$1,500=$16,500) then add the gain to Fred's AGI ($45,000+$16,500=$61,500).

 

2.   He sells the stock on October 12, 2018, for $28,000.

 

 

1.   He sells the stock on December 16, 2018, for $42,000.

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