Show your work when applicable for partial credit** (10 points) Kelsey and David are married and would like to gift to their sole grand-daughter Lauren one of two pieces of property, each worth $300,000, and then sell the other themselves. Lauren is planning on selling the property shortly after receiving it. Assume that any sale by Kelsey and David would be subject to either 32% ordinary rate or 15% long-term capital rate, whichever is applicable, and any sale by Lauren would be subject to either 10% ordinary rate or 0% long-term capital rate (given she has lower income). Ignore 3.8% Medicare investment surtax for this problem. Given your understanding of depreciation recapture, which of the following assets would you recommend Kelsey and David gift if the strategy is to minimize combined taxes between the overall family? Why? (Show your work for partial credit) Rental Property (bought 10 yrs ago)- FMV $300,000, Purchased $250,000, Depreciated $80,000 Land Held for investment (purchased 5 years ago)- FMV $300,000, Purchased for $200,000

Show your work when applicable for partial credit". (10 points) Kelsey and David are married and would like to gift to their sole grand-daughter Lauren one of two pieces of property, each worth $300,000, and then sell the other themselves. Lauren is planning on selling the property shortly after receiving it. Assume that any sale by Kelsey and David would be subject to either 32% ordinary rate or 15% long-term capital rate, whichever is applicable, and any sale by Lauren would be subject to either 10% ordinary rate or 0% long-term capital rate (given she has lower income). Ignore 3.8% Medicare investment surtax for this problem. Given your understanding of depreciation recapture, which of the following assets would you recommend Kelsey and David gift if the strategy is to minimize combined taxes between the overall family? Why? (Show your work for partial credit) - Rental Property (bought 10 yrs ago)- FMV $300,000, Purchased $250,000, Depreciated $80,000 - Land Held for investment (purchased 5 years ago)- FMV $300,000, Purchased for $200,000