Justin’s 24-year-old son, Carlos, is a full-time student. In April 2017, Justin gave Carlos 450 shares of Striker Oil stock. Justin purchased the stock 8 months earlier at $18 per share. On the gift date, the stock was worth $31 per share. After the gift, Striker Oil declared and paid a $200 dividend to Carlos. Then three months later, Carlos sold his 450 shares for $38 per share. Justin and Carlos are in the 39.6 and 15 percent marginal tax brackets, respectively.

a. How much must Carlos and Justin include in gross income in 2017?

b. What family tax savings were achieved through this gift?

c. How would your answer to

(b) change if Carlos held the stock for 5 months before selling for

$38 per share?