Mary has two lots, each worth $500,000. She plans to give one lot to charity and sell the other lot for her personal use. She originally purchased lot A for $100,000 and lot B for $400,000. Which transaction would give her the largest potential tax benefit? 

1. Giving lot A and selling lot B maximizes the tax benefits because of differences in both capital gain and the charitable deduction.

2. Giving lot B and selling lot A maximizes the tax benefits because of differences in capital gain, even though the though the charitable deduction is the same regardless of which lot is given. 

3. Giving lot B and selling lot A maximizes the tax benefits because of differences in both capital gain and the charitable deduction. 

4. The tax consequences are the same regardless of which lot is given to charity.

5. Giving lot A and selling lot B maximizes the tax benefits because of differences in capital gain, even though the though the charitable deduction is the same regardless of which lot is given.

Answer rating: 100% (QA)

1 Giving lot A and selling lot B This scenario may maximize tax benefits if lot A has a lower capita... View the full answer