Erik Gladstone owns 10,000 shares of Publix Inc., a publicly traded Canadian corporation. These shares were acquired at a cost, including brokerage fees, of $125,000. Based on current trading values, the shares are now worth $175,000.

The following four Cases make different assumptions as to the identity of the purchaser, the circumstances of the sale, and the proceeds of disposition. In each Case, assume that the purchaser immediately resells the shares for their fair market value of $175,000.

Case 1 Because Eric needs cash to acquire a condominium for his new girlfriend, he sells the shares to an arms length party for $175,000.

Case 2 As part of a settlement with his previous spouse, Erik gifts the shares to his 16 year old daughter. She sells the shares and uses the proceeds to finance her continued education abroad.

Case 3 Erik sells the shares to his impoverished sister for $100,000 to create a loss as he has realized significant capital gains during the current year. Since his sister has no other source of income, she will be taxed on the gain from the resale at the minimum federal rate.

Case 4 Eriks mother has realized a large amount of capital gains during the current year. To help his mother (and because he could really use the cash), Erik sells the shares to her for $250,000. She plans to use the loss on the immediate resale to offset her capital gains.

Required: For each of the cases, advise Erik of the tax consequences that will result from the disposition and indicate the tax consequences to the purchaser of the shares when they are resold. In addition, in Cases 3 and 4, indicate whether the stated tax planning objective was achieved.