In December each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in the 28% marginal tax bracket, is considering the following alternatives for satisfying the contribution.
Fair Market Value
(1) Cash donation ...................... $23,000
(2) Unimproved land held for six years ($3,000 basis) ......... 23,000
(3) Blue Corporation stock held for eight months ($8,000 basis) ..... 23,000
(4) Gold Corporation stock held for two years ($28,000 basis) ..... 23,000
Eleanor has asked you to help her decide which of the potential contributions listed above will be most advantageous taxwise. Evaluate the four alternatives and write a letter to Eleanor to communicate your advice to her. Her address is 2622 Bayshore Drive, Berkeley, CA 94709.