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

question 54

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 at tax considerations and using only the assets described above, Eric's best choice is to:

• A) Donate the Crane stock by gift to the church and sell the Hawk stock now.
• B) Donate the Hawk stock by death to the church and sell the Cardinal stock now.
• C) Donate the Hawk stock by gift to the church and sell the Crane stock now.
• D) Donate the Cardinal stock by gift to the church and sell the Hawk stock now.

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Definitions:

Auditing Standards

Rules and guidelines set by governing bodies that dictate the auditing process, ensuring consistency, and reliability in financial reporting.

Sarbanes-Oxley Act

A U.S. federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures, including those related to financial statements and corporate governance.

Authoritative Accounting Guidance

Officially recognized principles and standards that govern financial reporting and accounting practices.

ASC

Accounting Standards Codification, the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities in the United States.