Federal Taxation 1

Sadie sold 12 shares of stock to her brother, George, for $640 16 months ago. Sadie had purchased the stock for $880 two years earlier. If George sells the stock for $1,120, what are the amount and character of his recognized gain or loss in the current year?

Multiple Choice

• $240 long-term capital gain.

• $240 short-term capital gain.

• None of the choices are correct.

• $480 short-term capital gain.

• $0.