Members of the Maryland Association of Certified Public...

Tax answers

March 08, 1996

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: My mother gave me a gift of 16 shares of stock this year which I sold a few days later. I sold them for about $1,000. How do I report this on my return?

A: You must report your sale on Schedule D, capital gains and losses. The amount of gain or loss is the difference between the proceeds you receive from the sale and your basis in the stock.

There are two possible bases that can be used -- one for determining gain on the sale and another for determining loss.

If the proceeds from the sale exceed your mother's cost basis in the stock, you have a gain on the sale and you use her basis amount as your basis.

If the proceeds are less than her basis, your basis becomes the lesser of either her basis or the fair market value of the stock at the date of the gift.

If the proceeds are less than the basis, you have a loss. If the proceeds exceed this basis, you have neither a gain nor a loss and report basis equal to the sale proceeds.

For the purpose of determining whether this disposition is long ,, term or short term, use your mother's original trade date as the date acquired.

TAX HELP: Officials from the IRS and Maryland State Comptroller's Office will be at Security Square Mall and Towson Town Center tomorrow from 11 a.m. to 5 p.m. to answer taxpayers' questions and provide tax forms. At Security, tax officials will be next to the information booth near the food court. At Towson, they will be on the first floor in front of the Garden Cafe at the base of the escalators.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. A joint service from The Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15. To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Using a touch-tone phone, enter 6225 after you hear the greeting.

Callers are asked to leave their names and phone numbers, should questions need to be clarified. Selected questions will be answered in the Business section. No questions will be answered by phone. Names and numbers will not be published.

Pub Date: 3/08/96

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