Charles Horn wants his daughter Sharon to get stock that he owns in Crimson Corporation. He acquired the stock two years ago at a cost of $800,000, and it currently has a fair market value of $650,000. Charles has made prior taxable gifts and is in poor health. He seeks your advice as to whether he should gift the stock to Sharon or pass it to her under his will. Charles has a large capital loss carryover and has no prospect for any capital gains.
a. Write a letter to Charles regarding the tax implications of the alternatives he has suggested. His address is 648 Scenic Drive, Chattanooga, TN 37403.
b. Prepare a memo for your firm’s files on this matter.