For his birthday, Moose gives his son, Babe, a valuable basketball card. Moose paid $100 for the card 12 years earlier. On Babe’s birthday, the card is valued in a basketball card guidebook at $90. What is Babe’s basis in the card? Explain.
a. Assume that Babe sells the card 2 months after his birthday for $80. What is Babe’s gain or loss on the sale of the card? What is the holding period?
b. Assume that Babe sells the card 2 months after his birthday for $125. What is Babe’s gain or loss on the sale of the card? What is the holding period?
c. Assume that Babe sells the card 2 months after his birthday for $95. What is Babe’s gain or loss on the sale of the card?