In 2007 Iris King bought shares of stock as an invest-ment, at a cost of $10,000. During 2009, when the fair market value was $8,000, Iris gave the stock to her daughter, Ruth.
If Ruth sells the shares of stock in 2010 for $7,000, Ruth's recognized loss would be
a) $3,000
b) $2,000
c) $1,000
d) $0
Answer: c) $1,000
Ruth's holding period of the stock for purposes of determining her loss
a) Started in 2007.
b) Started in 2009.
c) Started in 2010.
d) Is irrelevant because Ruth received the stock for no consideration of money or money's worth.
Answer: b) Started in 2009.