Eric, age 80, has accumulated about $6 million in net assets. Among his assets are the following marketable securities held as investments. Eric would like to donate (either by lifetime or testamentary transfer) $250,000 in value to his church. In addition, to consummate a land deal, he needs $250,000 in cash. Looking solely to tax: considerations and using only the assets described above, Eric's best choice is to:

Question

Eric, age 80, has accumulated about $6 million in net assets. Among his assets are the following marketable securities held as investments.  Eric would like to donate (either by lifetime or testamentary transfer) $250,000 in value to his church. In addition, to consummate a land deal, he needs $250,000 in cash. Looking solely to tax: considerations and using only the assets described above, Eric's best choice is to:

Quizplus · Accepted Answer

If Eric were to donate the Crane stock, which has the highest rate of return, as a gift to the church, he would avoid paying capital gains tax on the appreciation of the stock. Selling the Hawk stock now would provide him with the necessary cash for the land deal without incurring any additional taxes, since the stock has only a nominal gain. By choosing this option, Eric would be able to donate the $250,000 to his church while maintaining a balanced investment portfolio. Donating the Hawk stock by death may seem like another viable option, but this would not provide Eric with the necessary cash for his land deal. Therefore, option C is the most attractive and tax-efficient technique for Eric to use.

Eric, Age 80, Has Accumulated About $6 Million in Net