On May 1, 2010, Daniel Wright owned stock (held for investment) purchased two years earlier at a cost of $10,000 and having a fair market value of $7,000. On this date he sold the stock to his son, William, for $7,000. William sold the stock for $6,000 to an unrelated person on July 1, 2010. How should William report the stock sale on his 2010 tax return?
a) As a short-term capital loss of $1,000.
b) As a long-term capital loss of $1,000.
c) As a short-term capital loss of $4,000.
d) As a long-term capital loss of $4,000.
Answer: a) As a short-term capital loss of $1,000.