Ira Cook is planning to make a charitable contribution to the Boy Scouts of Crystal, Inc. stock worth $20,000. The stock has an adjusted basis of $15,000. A friend has suggested that Ira sell the stock and contribute the $20,000 in proceeds rather than contribute the stock.

a. Complete the statements below regarding whether Ira should follow the friend's advice. (You may ignore any consideration of limitations to charitable contributions.)

Selling the stock would result in a recognized gain of $ for regular income tax purposes. Therefore, Ira should not follow the friend's advice.

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A donor can achieve several tax advantages by making gifts of appreciated property.

b. Assume that the fair market value is only $13,000. Complete the statement below regarding the tax consequences to Ira of following the friend's advice.

If Ira follows the firiend's advice, he will recognize a loss of $.

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Partially correct

c. Ira is considering giving the stock to his niece instead of the Boy Scouts. Complete the statements below regarding the possible tax consequences to Ira.

If the stock has a fair market value of $20,000 and the adjusted basis of the stock is $15,000, Ira should give his niece the stock .

If the fair market value of the stock is $13,000, Ira should give his niece the proceeds from the sale of the stock .

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Correct

d. Complete the letter from Ira's accountant regarding whether he should sell the stock and contribute the cash or contribute the stock to the Boy Scouts, if the adjusted basis is $15,000. Ira told his accountant that he purchased the stock six years ago.

Hoffman, Young, Raabe, Maloney, & Nellen, CPAs

5191 Natorp Boulevard

Mason, OH 45040

December 3, 2017

Mr. Ira Cook

500 Ireland Avenue

DeKalb, IL 60115

Dear Mr. Cook:

I am responding to your request concerning whether you should (1) contribute Crystal stock to the Boy Scouts or (2) sell the stock and contribute the cash instead. My conclusions are based on the information you provided during our telephone conversion:

(a) The Crystal stock was purchased six years ago;

(b) The adjusted basis of the stock is $15,000 and

(c) The fair market value of the stock is $20,000.

More beneficial tax consequences result if you contribute the stock to the Boy Scouts . Under this option, you will be entitled to a charitable contribution deduction of $. Under the second option, a charitable deduction of $ is available, given that cash is being contributed to the Boy Scouts. The sale of the stock would be a taxable event that would result in a recognized gain of $.

I do recommend that you contribute the stock to the Boy Scouts. Should you need additional advice, please contact me.

Sincerely,

Pat Campbell, CPA

Tax Partner