Pat’s 58-year-old husband Dennis recently died. He was employed by FastFood, Inc. at the time of his death. She brings Dennis’ retirement plan summary description to you for review. The employer-sponsored retirement plan is an ESOP. Pat is age 60.  What advice might you give to her?

I. If she takes the employer securities as part of a lumpsum distribution, all of the net unrealized appreciation

(NUA) will be nontaxable at the time of distribution.

II. The NUA constitutes income in respect of a decedent

(IRD).

III. When she sells the stock after receiving it as part of a lump-sum distribution, the NUA portion of the proceeds will be taxed as long-term capital gain.

IV. If she takes the employer securities as part of a lumpsum distribution, all of the net unrealized appreciation

(NUA) will be taxable at the time of distribution.

A. I, II, III.

B. I, II.

C. II.

D. I, III.