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Not following this answer- just yet
SOlid-56181 - 08/20/2018, 1:17 am

Why is it a loss to Hannah if she has purchased vs. been gifted the stock. I am interpreting the answer that she 1st has a loss which she can use to offset the gain from the sale but I am not following the loss part?

Help?

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RAIN - 08/23/2018, 6:03 pm

Hanna did purchase the stock. Julia cannot claim a loss on a related party sale. Hanna has a gain of $2,000, but it is not recognized because it is not more than the loss previously disallowed.

If this were a gift Hanna would recognize the $2,000 gain when sold.

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user-370 - 11/14/2018, 1:04 am

"If this were a gift Hanna would recognize the $2,000 gain when sold" if Julia's basis was 30,000. If basis is 33,000 no gain/loss as selling price (32,000) is between FMV (30,000) & basis (33,000), correct?

RAIN - 11/19/2018, 4:00 pm

@user-370 Yes, that is correct. Julia has loss of $3,000 but cannot take it because the sale is to a related party. Hanna has gain of $2,000 but does not report it because it is not more than the $3,000 loss previously disallowed to the related party. If Hanna sold for more than $3,000 gain she would report the gain after subtracting the $3,000 previously disallowed, but since she sold for less than $33,000 her gain isn't recognized.

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Leelah-18085 - 10/15/2019, 12:22 pm

It is a loss because 1.) Hannah and Julia are related parties(eg: sisters). (2.) With related parties rules, Julia’s loss when she sold the stock to Hannah is disallowed/deferred until.. (3.) Hannah eventually sells the stock. Even though Hannah sold to an UNrelated party for a $2,000 “gain” because there is already a deferred $3000 loss “in the family” she can use thst loss to reduce her $2000 gain down to $0.

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