Reference no: EM133020567

Question - Merv sold stock with a cost basis of $33,000 to his father, Griffin, for $31,000, the fair market value of the stock on the date of sale. Six months later, Griffin sold the same stock through his broker for $34,000. What is the tax effect of these transactions?

Disallowed loss to Merv of $2,000; gain to Griffin of $3,000.

Deductible loss to Merv of $2,000; gain to Griffin of $1,000.

Disallowed loss to Merv of $2,000; gain to Griffin of $1,000.

Deductible loss to Merv of $2,000; gain to Griffin of $3,000.