Eric,age 80,has accumulated about $4 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 $4 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 option is to donate the Hawk stock now to the church and sell the Crane stock. This will allow Eric to achieve both of his goals: donate $250,000 in value to the church and obtain $250,000 in cash.

Selling the Crane stock will generate the necessary cash, while donating the Hawk stock will allow Eric to take advantage of the tax benefits of charitable giving. By donating appreciated securities, Eric will avoid paying capital gains tax on the appreciation and can also claim a charitable deduction on his income tax return.

Donating the Cardinal stock or selling the Hawk stock now would not allow Eric to achieve both of his goals simultaneously, and donating the Crane stock by death would not provide the immediate cash he needs for the land deal. Therefore, option C is the best choice.

Eric,age 80,has Accumulated About $4 Million in Net Assets