Eric, Age 80, Has Accumulated About $6 Million in Net

question 55

Multiple Choice

Eric, age 80, has accumulated about $6 million in net assets. Among his assets are the following marketable securities held as investments. $$\begin{array} { l c c } & \text { Basis } & \text { FMV } \\\text { Cardinal Corporation stock } & \$ 200,000 & \$ 250,000 \\\text { Crane Corporation stock } & 300,000 & 250,000 \\\text { Hawk Corporation stock } & 50,000 & 250,000\end{array}$$ 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:

• A)Donate by gift to the church the Crane stock and sell the Hawk stock now.
• B)Donate by death to the church the Hawk stock and sell the Cardinal stock now.
• C)Donate by gift to the church the Hawk stock and sell the Crane stock now.
• D)Donate by gift to the church the Cardinal stock and sell the Hawk stock now.
• E)None of the above is an attractive technique.

---

Definitions:

Consumers

Individuals or organizations that use economic goods and services produced within an economy.

Firms

Business entities or organizations that produce goods or provide services with the aim of making a profit, often operating within specific industries or markets.

Economic Theory

A set of principles and models that explains how economies operate and how economic agents interact.

Total Profit

The difference between a firm's total revenue and its total costs, indicating the overall financial gain from its business activities.