What would be Bob's basis per share in the stock received as a gift?

When determining the basis per share in stock received as a gift, it's essential to consider the donor's basis, particularly if it is higher than the fair market value (FMV) at the time of the gift. The recipient of the gift typically takes on the donor's basis, as long as it is less than the FMV of the stock at the time of the gift.

In this scenario, if the basis per share is $12, this implies that the original owner (the donor) initially purchased the shares at this price. Therefore, Bob’s basis for the stock received as a gift would indeed be $12 per share, assuming there were no other considerations to factor in. This understanding is critical in tax situations because it affects both future gains or losses when Bob decides to sell the stock.

The other choices suggest values either higher or non-existent, which would not hold true in a situation where the gift basis follows the donor's original purchase price unless certain conditions apply, such as if the stock had dropped below that value. However, if the stock's fair market value was lower than $12 at the time of the gift, Bob's basis would still be maintained at $12 to prevent gain recognition immediately following the transfer. Thus, the most