Tom recently received 2,040 shares of restricted stock from his employer, Independence Corporation, when the share price was $11 per share. Tom’s restricted shares vested three years later when the market price was $15. Tom held the shares for over three years and sold them when the market price was $13. What is the amount of Tom’s income or loss on the sale?

Bad Brad received 20 NQOs (each option gives him the right to purchase 30 shares of stock for $12 per share) from his employer. When he started working, the stock price was $11 per share. Now that the share price is $25 per share, he exercises all of the options. Two years later, Bad Brad sells the stock for $27 per share. What is Bad Brad’s basis in his stock for calculating the gain or loss at the time of the sale?

Alpha sold machinery that it used in its business to Beta, a related entity, for $39,800. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,200 and has claimed $29,800 of depreciation expense. What is the amount and character of Alpha’s gain?

Jasmine started a new business in the current year. She incurred $14,000 of start-up costs. How much of the start-up costs can be immediately deducted (excluding amounts amortized over 180 months) for the year?

Butte sold a machine to a machine dealer for $50,300. Butte bought the machine for $54,700 several years ago and has claimed $12,350 of depreciation expense on the machine. What is the amount and character of Butte’s gain or loss?

Arlington LLC purchased an automobile for $61,900 on July 5, 2025. What is Arlington’s depreciation deduction for 2025 if its business-use percentage is 75 percent? (Ignore any possible bonus depreciation.) (Use MACRS Table 1 from Question 4 and Exhibit 10-10 from Question 7.)      

Which of the following statements is true regarding employer-provided qualified retirement plans?

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working, when the stock price was $6 per share. When the share price was $15 per share, she exercised all of her options. Eighteen months later, she sold all of the shares for $20 per share. What is the amount of Maren’s bargain element?

Daschle LLC completed some research and experimentation during June of the current year. The related costs were $66,000. If Daschle wants to recover the costs as quickly as possible, what is the total deduction Daschle may deduct during the current year?

Riley participates in an employer’s 401(k) plan. Riley retired in 2025 at age 75. When must Riley receive the distribution pertaining to 2025 to avoid minimum distribution penalties?