Reference no: EM132544631

Question - William bought 1,000 shares of Bevo stock three years ago for $100 per share. This year he has a $20,000 short-term capital gain from the sale of his shares of an initial public offering of GBD Company stock. To offset the gain, William sells his shares of Bevo to his grandfather for $80,000, its current fair market value. The next month, William's grandfather sells the stock for $85,000 to his neighbor. Determine William's realized and recognized gain or loss on the sale of Bevo stock. Determine the grandfather's basis in the stock purchased from William and his realized and recognized gain or loss when he sells the stock to his neighbor.