Arthur,age 99,holds Some Stock Purchased Many Years Ago for $10,000

question 26

Multiple Choice

Arthur,age 99,holds some stock purchased many years ago for $10,000 which is now worth $100,000.He is trying to plan for the eventual disposition of this stock.Arthur's only remaining family member is his grandson.For income tax purposes,Arthur should

• A)sell the stock and gift the proceeds to his grandson.
• B)gift the stock to his grandson.
• C)leave the stock to his grandson as an inheritance.
• D)All of the above will result in the same income tax consequences.

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Definitions:

Break-even Point

The point at which total costs equal total revenue, with no profit or loss, indicating the minimum sales volume needed to cover all expenses.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Unit Variable Cost

The cost associated with producing one additional unit of a product, excluding fixed costs.

Price

Price is the amount of money charged for a product or service, or the sum of values that consumers exchange for the benefits of having or using the product or service.