In December each year, Eleanor Young contributes 10% of her gross income to the United Way (a 50% organization). Eleanor, who is in the 28% marginal tax bracket, is considering the following alternatives for satisfying the contribution.
|
Fair Market Value |
|
|
(1) Cash donation |
$23,000 |
|
(2) Unimproved land held for six years ($3,000 basis) |
23,000 |
|
(3) Blue Corporation stock held for eight months ($3,000 basis) |
23,000 |
|
(4) Gold Corporation stock held for two years ($28,000 basis) |
23,000 |
Eleanor has asked you to help her decide which of the potential contributions listed above will be most advantageous tax wise. Evaluate the four alternatives and write a letter to Eleanor to communicate your advice to her. Her address is 2622 Bay shore Drive, Berkeley, CA 94709.