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Lolita and Larry are thinking about adding to their family next year. If they 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 they 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 in their situation? a. They should sell the stock this year while they are in the 25% marginal tax bracket because
this will result in a larger deduction than waiting and selling when they are in a lower
bracket. b. They should sell the stock next year, making the deduction more valuable as an offset to
Lolita’s lost income. c. They should sell the stock this year because the full value of the loss can be used this year to
reduce their gross income level. d. They should sell the stock next year because they Currently do not need a tax loss to reduce
their reportable income.

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