Critical Thinking

L$0\mathrm{.}1,2,3,5$ Simon owns stock that has declined in value since acquired. He will either give the stock to his nephew, Fred, or sell it and give Fred the proceeds. If $-$Fred receives the stock, he then will sell it to obtain the proceeds. Simon is in the $12\%$ Federal income tax bracket, and Fred's bracket is $22\%.$ In either case, the holding period for the stock will be short term.

Identify the tax issues relevant to Simon in deciding whether to give the stock or the sale proceeds to Fred.