I received from my grandparent's stocks (as a gift) which I have sold this year (2016). Is the basis that I use for the loss at the purchase or at the day of receiving the gift?
It depends on a few factors, but it's pretty easy to nail down.
If fair market value (FMV) when gifted was higher than your grandparents' basis, then you use their basis, but can adjust that basis up if they paid gift tax.
So, if your grandparents had a $500 basis, gifted to you when the value was $1000, then your basis is $500.
If fair market value when gifted was lower than your grandparents' basis, then it depends on whether or not you sold at a loss or profit.
Example would be, grandparents' basis is $1000, FMV when gifted is $900:
- If you sell for $1100, your basis is $1000
- If you sell for $800, your basis is $900
- If you sell for $950 you report no gain or loss.