What is Glen's capital gain if he sells stock worth $12,000 that he received as a gift?

When determining the capital gain for a gifted asset, it's essential to understand the basis of the asset at the time of the gift. Generally, the recipient of a gift takes on the donor's basis in the asset for tax purposes. This means that Glen's capital gain will be calculated based on the difference between the selling price of the stock and the donor's basis in that stock.

In this scenario, if Glen sells the stock for $12,000, we would also need to consider the basis that Glen inherited from the person who gifted him the stock. For example, if the donor's basis in the stock was $10,000, then Glen would realize a capital gain of $2,000 when he sells it for $12,000.

So, if $10,000 was indeed the basis, then the capital gain is calculated as follows:

Selling Price: $12,000

Basis: $10,000

Capital Gain = Selling Price - Basis = $12,000 - $10,000 = $2,000

This illustrates the importance of the basis in determining capital gains. If the basis is low relative to the selling price, it results in a significant capital gain, whereas if the basis and selling price are equal