Wade paid $7,000 for an automobile that needed substantial repairs. He worked nights and weekends to restore the car and spent $2,400 on parts for it. He knows he can sell the car for $13,000. His daughter's college tuition is due in a few days. Wade wonders if it matters, after taxes, whether he sells the car and pays the tuition or whether he gives the car to his daughter and she sells it for $13,000 and pays her tuition. What should Wade do?

Select "Yes" or "No" whichever is applicable.

a. Wade should give the car to his daughter to sell. She will not have to pay taxes on the subsequent sale of the car, since it was acquired as a gift.

b. Wade should give the car to his daughter to sell because, although she would have to pay taxes on the sale of the car, she is likely in a lower tax bracket, resulting in tax savings for the family unit.

c. Wade should sell the car. If Wade gives his daughter the car, he will have to pay gift tax as well as income tax, since his daughter is considered a related party.

d. Wade should sell the car, since his taxable gain will be less due to the time he spent restoring the car than if his daughter sells the car.