Mac's 24-year-old daughter, Alana, is a full-time student. In 2016, Mac gives Alana 600 shares of Highgrowth

Question:

Mac's 24-year-old daughter, Alana, is a full-time student. In 2016, Mac gives Alana 600 shares of Highgrowth stock. Mac purchased the stock 10 months ago at $20 per share. On the gift date, the stock is worth $35 per share. After the gift, Highgrowth declares and pays a $170 to Alana. The next month, Alana sells her 600 shares for $38 per share. Mac and Alana are in the 33 and 15 percent marginal tax brackets, respectively.
a. How much must Alana and Mac include in gross income in 2016?
b. What family tax savings are achieved through this gift?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...