Simon owns stock that has declined in value since acquired. He has decided either to give the stock to his nephew, Fred, or to sell it and give Fred the proceeds. If Fred receives the stock, he will sell it to obtain the proceeds. Simon is in the 12% tax bracket, while Fred's bracket is 22%. In either case, the holding period for the stock will be short term. Identify the tax issues relevant to Simon in deciding whether to give the stock or the sale proceeds to Fred.