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

Eric's best choice is to donate the Hawk stock to the church by gift and sell the Crane stock now. This is the best option because it allows Eric to donate securities that have appreciated the most, resulting in a bigger tax deduction. Donating securities that have appreciated can provide a double benefit: a charitable contribution deduction for the current fair market value of the donated securities and avoiding capital gains tax on the appreciation. The Hawk stock has appreciated the most among the three securities held as investments, thus donating it will maximize the tax benefit. Additionally, selling the Crane stock will provide Eric with the cash he needs for the land deal while realizing a smaller capital gain.

Eric,age 80,has Accumulated About $6 Million in Net Assets