Mr. Nudnic completed the following transactions in 2020.

(a)He gave his wife 100 common shares of Underground Airways Ltd., a public company which had cost him $30 per share several years ago. At the time of the gift, the fair market value of the shares was $50 per share. The shares pay an annual dividend of $2 per share. His wife plans to reinvest the dividends in more shares of the company. If and when she sells the shares, she will reinvest the proceeds in shares of other corporations.

(b)In order to provide for his 13-year-old daughter's future education, he transferred a stone sculpture which had a fair market value of $50,000 to her. The lawyer who arranged to transfer title to the sculpture advised him to sell it to his daughter for $1 of her own money to effect a legal transfer. Mr. Nudnic had inherited the sculpture on the death of his mother when the fair market value of the sculpture was $20,000. In about five years, when his daughter begins university, she will sell the sculpture.

Required:

Discuss all of the possible income tax implications of these transactions through to the ultimate disposition by the recipient of the property involved.