Dale, who files a joint return, purchased Blue Corporation stock four years ago for $1,000 as an investment. He intended to hold the stock until funds were needed to help pay for his daughter’s college education. Today the stock has a $6,500 FMV and Dale decides to sell the stock and give the proceeds, less any taxes paid on the sale, to Tammy, his 22-year-old daughter. Dale’s marginal tax rate is 32%. Tammy has no other gross income and receives more than half of her support from Dale.

a. What advice would you give to Dale?
b. What is the cash savings if Dale follows your advice?