LO.5 Roby and Sid have been married for 12 years. Roby sells Peach, Inc. stock that she has owned for four years to Sid for its fair market value of $120,000. Her adjusted basis is $150,000.

a. Calculate Roby’s recognized gain or recognized loss.

b. Calculate Sid’s adjusted basis for the stock.

c. How would the tax consequences in

(a) and

(b) differ if Roby had made a gift of the stock to Sid? Which form of the transaction would you recommend?