How will you respond to alices proposal would your response

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Holly owns stock with an adjusted basis of 2500.00 and fair market value of 9500.00. Holly expects the stock to continue to appreciate. Alice, Holly's best friend, recently had surgery for cancer. Alice's physicians have told her that her life expectancy is between six months and one and half years. One day at lunch, the two friends were discussing their tax situations (both believe they pay too much), when Alice mentioned that she had read a newspaper article about a tax planning opportunity that might be suitable for Holly. Holly would make a gift of the appreciated stock to Alice. In her will, Alice would bequeath the stock back to Holly. Because Alice is confident she will live longer than a year, the basis of the stock to Holly would be the fair market value on the date of Alice's death. Alice would "feel good" because she had helped Holly "beat the tax system." You are Holly's tax adviser. How will you respond to Alice's proposal? Would your response change if the stock were a painting that Alice could enjoy for her remaining days? Explain.

Reference no: EM13587724

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