Use RIA Checkpoint to answer the following questions.

19. Rose, one of your clients, was born male but has lived as a woman for several years after being diagnosed with gender identify disorder. Rose has decided to have a sex-change operation this year. She asks you if the related costs will be deductible as medical expenses. What do you tell Rose?

a. No, sex reassignment surgery and hormone therapy in connection with the treatment of gender-identify disorder are considered cosmetic in nature and not deductible.

b. Yes, sex reassignment surgery and hormone therapy in connection with the treatment of gender-identify disorder are considered to be for treatment of a disease and are deductible.

20. To answer this question, do a keyword search in the Federal Tax Coordinator Client Letters area of Checkpoint. Use the following search: basis /5 gifts. Assume your aunt Lila owns stock worth $400,000. Lila purchased the stock many years ago for $5,000. This year Lila gifts you the stock. You would like to know what your tax consequences will be if you immediately sell the stock for $400,000, e.g., will you have $395,000 of gain because your basis in the stock is only $5,000, or zero gain because your basis in the stock is $400,000?. What amount of gain will you have and what is the title of the client letter you found to answer this question?

a. $395,000; 2230 Gain or loss on sale of property received as a gift.

b. Zero; 2230 Gain or loss on sale of property received as a gift.

c. $395,000; 2120 Inherited property; basis rules.

d. Zero; 2120 Inherited property; basis rules.