yes they can but the issue is reporting because the 1099 reflects $404. you'll end up with no taxable gain nor a loss.
you report sales price as $404 selling expenses as $9 cost as $305 and an adjustment of $90 using code O.
you also need to file a gift tax return.
your son's basis is
§ 1.1015-4 Transfers in part a gift and in part a sale.
(a) General rule. Where a transfer of property is in part a sale and in part a gift, the unadjusted basis of the property in the hands of the transferee is the sum of—
(1) Whichever of the following is the greater:
(i) The amount paid by the transferee for the property, or
(ii) The transferor's adjusted basis for the property at the time of the transfer, and
(2) The amount of increase, if any, in basis authorized by section 1015(d) for gift tax paid
Example 1.
If A transfers property to his son for $30,000, and such property at the time of the transfer has an adjusted basis of $30,000 in A's hands (and a fair market value of $60,000), the unadjusted basis of the property in the hands of the son is $30,000.
