PFIN 5th Edition by Randall Billingsley,Lawrence Gitman,Michael Joehnk

Exercise 8

Lifetime gifting strategy. Rosa Fuentes has accumulated substantial wealth and plans to gift some of her wealth to her son Marcos. She is considering two assets: a beach house, which cost $150,000 twenty years ago and now has a fair market value of $500,000; and shares in three mutual funds, which cost her $400,000 five years ago and now have a fair market value of $500,000. Prepare a memo advising Rosa which property to give to Marcos. In your memo, consider two scenarios: one where Marcos sells the property and one where he does not.