Elliot sells some stock to his sister, Nancy, for $4,000. His basis in the stock is $6,000.

What is the effect of the sale on Elliot and Nancy if several years later:

Enter all amounts as positive numbers.

a. Nancy sells the stock for $7,000.

The gain on sale by Nancy is $, which is reduced by Elliot's disallowed loss of $___________ and her recognized gain is $____________

b. Nancy sells the stock for $5,000.

The gain on the subsequent sale is only $. Nancy may only use $_____________ of Elliot's disallowed loss to offset her gain.

c. Nancy sells the stock for $2,000.

Elliot's disallowed loss (CAN OR CANNOT?) be used to (INCREASE OR DECREASE?) Nancy's loss on the subsequent sale. Nancy recognizes a $__________ loss