4 Cindy sold her GE stock to her brother Jeff for 1200 She b

4. Cindy sold her GE stock to her brother Jeff for $1,200. She bought the stocks for $1,500.

a. How much is Cindy’s deductible loss?

b. later, Jeff sold the stock to the third unrelated party for $1,500. What is Jeff’s gain or loss?

c. If Jeff sold the stock to the third unrelated party for $1,000, what is Jeff’s gain or loss?

Solution

a. Cindy deductibl loss would be Zero as she sold the stock to related person which as per section 1231 of IRS is not deductible

b. Jeff\'s loss = $ 1500 - 1500 = $ 0

c. Jeff Loss = $ 1000 - $ 1500 = $ 500

Part B and C have been solved as per the provision of Section 1231