Don't sell the shares, but borrow $80,000 from Spears Brothers Investment Bank, an investment bank in New York, for 5 years by posting all of the shares as collateral.
Don't sell the shares, but enter into a prepaid forward contract whereby Danny agrees to sell the shares to Spears Brothers Investment Bank in 5 years, in exchange for receiving $100,000 today and the remaining money at the end of the 5 years.
Danny likes the second option because it gives him more cash up front. But his tax advisor tells Danny that the first option is safer because it likely won't trigger any taxable gain. Danny comes to you for advice. Which option is better for Danny to avoid triggering taxable gain?

Answer rating: 100% (QA)

1 Borrowing 80 000 Against Shares as Collateral This option involves taking a loan against th View the full answer