Items 1 and 2 are based on the following data:
On March 1, 2007, Lois Rice learned that she was bequeathed 1,000 shares of Elin Corp. common stock under the will of her uncle, Pat Prevor. Pat had paid $5,000 for the Elin stock in 2002. Fair market value of the Elin stock on March 1, 2007, the date of Pat’s death, was $8,000 and had increased to $11,000 six months later. The executor of Pat’s estate elected the alternative valuation for estate tax purposes. Lois sold the Elin stock for $9,000 on May 1, 2007, the date that the executor distributed the stock to her.
Lois’ basis for gain or loss on sale of the 1,000 shares of Elin stock is
- $ 5,000
- $ 8,000
- $ 9,000
- $11,000
Lois should treat the 1,000 shares of Elin stock as a
- Short-term Section 1231 asset.
- Long-term Section 1231 asset.
- Short-term capital asset.
- Long-term capital asset.