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In determining the cost basis of the stock, do I use the date that the stock was issued in my name, or the actual date that I received the stock certificate?

You may need to keep track of some extra stuff with stock you receive as a gift. First, you'll need to know what the donor paid for the stock and when they purchased it. And you'll also need to know the FMV of the stock on the date you received it.

If the FMV on the date you received the stock is more than the donor's cost, life is easy. You just step into the donor's shoes and take over their cost and purchase date. But if it's less, you've got a little more complicated situation.

In that case, for calculating a gain on selling the stock, the cost basis will be whatever the donor paid for the stock. The holding period began when they purchased the stock. But for calculating a loss on selling the stock, the cost basis will be the FMV on the date you received the stock. The holding period still begins on the date they purchased the stock.

And in that situation, it is also possible for you to sell the stock for less than what the donor paid, but more than the FMV on the date it was gifted. So using the gain basis you calculate a loss, and using the loss basis you calculate a gain. So you'd report no gain or loss.

I'm confident I know the answer but figure it wouldn't hurt to double check.

So how'd you do? ;-)

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