Rose owns a house that she inherited from her grandmother seven months ago. Her grandmother lived in the house for over 40 years. Based on the estate tax return, the fair market value (FMV) of the house at the date of her grandmothers death was $475,000. According to the grandmothers attorney, the grandmothers cost basis in the house was $275,000. The real estate market for residential housing has recovered in the city in which the house is located. So, based on an appraisal, the house has a fair market value (FMV) of $600,000.

Rose is considering two options:

1) Give the house to her son Michael and his wife Sandra

2) Sell the house

Roses objectives are to minimize the recognition of any realized gain and to maximize the recognition of any realized loss. Based on the foregoing facts, what would you advise Rose to do with regard to the transactions?