Julia receives 1,000 shares of Cookery Corporation stock from her grandfather as a wedding present. The shares are selling for $24 per share on the date of the gift. Grandfather paid $8,000 for them 4 years earlier. He pays $3,000 in gift tax on the transfer of the shares to Julia.

a. What is Julia’s basis in the Cookery Corporation shares?

b. Two months after her wedding, Julia wants to take a trip to Europe. To get the money for the trip, she sells 400 Cookery shares at $17 per share and a pays a $500 commission on the sale. What is Julia’s gain or loss on the sale of the 400 shares? What is her holding period for the shares?