Assume the same facts as in Question 4, except the fair market value on the date of the gift is $50,000, and that Ellen holds the fund for 11 months, and then sells. She receives $40,000 proceeds from the sale.

a. What is the amount and nature (short- or long-term) of the gain or loss resulting from the sale?

b. From an income tax standpoint, is there a better way to have handled this?