The Taxpayer Owns Stock with an Adjusted Basis of $15,000

question 252

True/False

The taxpayer owns stock with an adjusted basis of $15,000 and a fair market value of $8,000. If the stock or cash is going to be given to her niece, it is preferable for the taxpayer to sell the stock and give the $8,000 of cash to her niece. The same preference would exist if the recipient were a qualified charitable organization.

---

Definitions:

Marginal Product

The increase in output resulting from the addition of one more unit of a certain input, while all other inputs are kept constant.

Units Per Period

A measure of productivity or output over a given time frame, indicating the number of units produced or sold.

Diminishing Marginal Returns

The principle that adding more of one factor of production, while holding others constant, will eventually yield lower additional outputs.

Total Product

The overall quantity of output produced by a firm from a given quantity of inputs.