Clarice, Age 90, Has Accumulated $1

question 1

Multiple Choice

Clarice, age 90, has accumulated $1.5 million in net assets.Included in this are three blocks of stock: Stock A has a basis of $300,000 and a fair market value of $400,000; Stock B has a basis of $400,000 and a fair market value of $200,000; Stock C has a basis of $100,000 and a fair market value of 400,000.Clarice needs $200,000 now to pay off the mortgage on her daughter's home and she wants to make a $400,000 donation to her Church either as a lifetime or testamentary transfer.Which assets should she sell to accomplish this with the least current tax cost?

• A)Sell Stocks A and C now.
• B)Sell Stock B and leave stock C to the Church upon her death.
• C)Sell Stock A and leave stock C to the Church upon her death.
• D)Sell Stock C and leave Stock B to the Church upon her death.

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Definitions:

Lakefront Property

Real estate located directly on the edge of a lake, often highly valued for its scenic views and access to water-based activities.

Specific Performance

A legal remedy requiring a party to perform a specific act, typically fulfilling a contract.

Fail to Close

A situation where a transaction or deal does not complete by the specified or agreed upon time.

Reduce Damages

Actions taken to minimize the amount of compensation required in a legal claim, often involving efforts to mitigate losses.