Question

Lolita and Larry are thinking about adding to their family next year. If Larry and Lolita do have a child, Lolita plans to be a stay-at-home mom. Larry is concerned about what will happen to their tax situation when Lolita stops working. One issue, in particular, that Larry and Lolita would like to discuss with their financial planner is whether they should sell the United Motor Company stock this year or wait until next year. What is the best recommendation given their current and project income tax situation

Answer 1

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Step-by-step explanation:

Going by the question, the best recommendation is that they should sell the stock this year even as they are in the 25% marginal tax category since this will lead to a larger overall income tax savings than waiting and selling it at the point when they will be in a lower marginal income tax bracket.

By doing so, a better profit from the stock will be guaranteed.