Brown, Inc., uses the three-to-seven year graded vesting approach for its defined benefit retirement plan. Peter has five years of service completed as of February 5, 2021, his employment anniversary date. Determine Peter's nonforfeitable percentage. a. 40% b. 60% c. 80% d. 100% 40. Abby sells real property for $300 000 The hun . 

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35. This year, Sarah started a business selling unique kitchen items both in stores and online. She purchased $70,000 of ending inventory. For tax purposes, Sarah adopted the cash method and the treatment of inventory as nonincidental goods during the year. Her ending inventory was $8,000, and she owed suppliers $15,000 at year end, including all of the supplies. Her deduction for inventory for the year is: a. $55,000. b. $62,000. c. $70,000. d. $85,000. 36. Yvonne exercises incentive stock options (ISOs) for 100 shares of stock at the option price of $100 per share cares for 21, 2021, when the fair market value is $120 per share. She holds the stock for only seven months and sells the shares for $140 per share. Determine the recognized gain on the sale and classify it as capital or ordinary. a. $2,000 ordinary income and $2,000 STCG. b. $2,000 ordinary income and $2,000 LTCG. c. $4,000 ordinary income. d. $4,000 LTCG. Date: 37. Spencer has an investment in two parcels of vacant land. Parcel 1 is a capital asset and parcel 2 is a 51231 asset. Spencer already has a short-term capital loss for the year that he would like to offset with capital gain. He has a 5 1231 lookback loss that exceeds the gain from the disposition of either land parcel. Spencer wants to sell only one land parcel: each of them would yield the same amount of gain. The gain that would be recognized exceeds the short-term capital loss Spencer already has. Which of the following statements is correct? a. Spencer will have a net capital loss no matter which land parcel he sells. b. Spencer will have a net capital loss if he sells parcel 2. c. Spencer will have a net capital loss if he sells parcel 1. d. Spencer will have a net capital gain if he sells either parcel 1 or parcel 2. 38. On June 1, 2021, Brady purchased an option to buy 1,000 shares of General, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Brady decided to let the option lapse as of December 1, 2021. On his 2021 tax return, what should Brady report? a. A $3,000 long-term capital loss. b. A $3,000 short-term capital loss. c. A $3,000 § 1231 loss. d. A $3,000 ordinary loss. 35. This year, Sarah started a business selling unique kitchen items both in stores and online. She purchased $70,000 of ending inventory. For tax purposes, Sarah adopted the cash method and the treatment of inventory as nonincidental goods during the year. Her ending inventory was $8,000, and she owed suppliers $15,000 at year end, including all of the supplies. Her deduction for inventory for the year is: a. $55,000. b. $62,000. c. $70,000. d. $85,000. 36. Yvonne exercises incentive stock options (ISOs) for 100 shares of stock at the option price of $100 per share cares for 21, 2021, when the fair market value is $120 per share. She holds the stock for only seven months and sells the shares for $140 per share. Determine the recognized gain on the sale and classify it as capital or ordinary. a. $2,000 ordinary income and $2,000 STCG. b. $2,000 ordinary income and $2,000 LTCG. c. $4,000 ordinary income. d. $4,000 LTCG. Date: 37. Spencer has an investment in two parcels of vacant land. Parcel 1 is a capital asset and parcel 2 is a 51231 asset. Spencer already has a short-term capital loss for the year that he would like to offset with capital gain. He has a 5 1231 lookback loss that exceeds the gain from the disposition of either land parcel. Spencer wants to sell only one land parcel: each of them would yield the same amount of gain. The gain that would be recognized exceeds the short-term capital loss Spencer already has. Which of the following statements is correct? a. Spencer will have a net capital loss no matter which land parcel he sells. b. Spencer will have a net capital loss if he sells parcel 2. c. Spencer will have a net capital loss if he sells parcel 1. d. Spencer will have a net capital gain if he sells either parcel 1 or parcel 2. 38. On June 1, 2021, Brady purchased an option to buy 1,000 shares of General, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Brady decided to let the option lapse as of December 1, 2021. On his 2021 tax return, what should Brady report? a. A $3,000 long-term capital loss. b. A $3,000 short-term capital loss. c. A $3,000 § 1231 loss. d. A $3,000 ordinary loss.

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