John has been operating his business selling widgets for many years. He was moved by the plight of people in North Queensland as a result of a cyclone and flooding (natural disaster) and donated some widgets to the Australian Red Cross (a deductible gift recipient) to assist people in the disaster areas to rebuild their lives. At 31 May of the current tax year the stock to be donated was valued as follows:

At Cost	$25 000
At Replacement	$32 000
At Market value	$40 000

The tax treatment of the donation of stock from John’s point of view would be:

Select one:

1. $32 000 of a tax deduction for the gift and $32 000 included in his assessable income.

2. $25 000 of a tax deduction for the gift and $25 000 included in his assessable income.

3. $40 000 of a tax deduction for the gift and $40 000 included in his assessable income.

4. $40 000 included in assessable income.

5. $25 000 of a tax deduction for the gift and $40 000 included in his assessable income.