Father sells stock (Basis ,000) to Daughter for ,000 (FMV). Daughter later sells the stock to an unrelated party for ,000. What is Father's recognized loss and Daughter's recognized gain?

Father's ,000 loss is disallowed under §267. Daughter's basis is cost (,000). Daughter sells for ,000, realizing a ,000 gain. She can offset this gain with Father's disallowed loss (up to the amount of gain). ,000 gain - ,000 utilized loss = 0 recognized gain.