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Years ago, Fran purchased stock in ABC company for $33,000. Last year, Fran sold the...

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Accounting

Years ago, Fran purchased stock in ABC company for $33,000. Last year, Fran sold the stock to her son, Steve, for $25,000 (its current market value). Steve later sells the shares for $20,000. Steve's adjusted basis in the stock and his recognized gain or loss on the sale are:

1) $33,000adjusted basis, $13,000 recognized loss

2) $33,000adjusted basis, $5,000 recognized loss

3) $25,000adjusted basis, $13,000 recognized loss

4) $25,000adjusted basis, $5,000 recognized loss

5) $33,000adjusted basis, $0 recognized gain

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