If Glen sells the stock for $12,000 in 2017 after receiving it as a gift, what is his capital gain?

When determining the capital gain from the sale of gifted stock, it's essential to consider the basis of the stock, which is typically the basis of the donor unless the fair market value (FMV) at the time of the gift is lower than the donor's basis.

In this scenario, Glen sells the stock for $12,000. If the donor's adjusted basis in the stock was $10,000, then Glen's capital gain would be calculated by subtracting the basis from the sale price. This means he would have a gain of $2,000 ($12,000 sale price minus $10,000 basis).

If the donor's basis were higher or equal to the sale price, the gain would be different, possibly resulting in a gain of zero if the basis was equal to the sale price, or even a loss if the basis exceeded the sale price. However, the context of this question implies that the basis must be positive, allowing for a calculation resulting in a $2,000 capital gain when Glen sold the stock for $12,000.

Thus, the choice indicating a capital gain of $2,000 accurately reflects the situation described, making it the correct response.