Answer: b. Harold is not required to recognize gross income but must reduce his cost basis in the land to $130,000.
Explanation:
When Harold bought the land for $150,000 he acquired a basis of $150,000 in the land. Due to Jewel's cash problems, he managed to pay $20,000 less for the land.
For tax reporting purposes, he need not recognize gross income but he must reflect that he acquired the land for $20,000 less in his basis for the land thereby reducing the basis to $130,000.
Answer:
b. 3.70 percent
Explanation:
Expected rate of return of a stock, given probabilities, is calculated by summing up the product of probability of each state occurring by the expected return of the stock should that happen.
Expected rate of return = SUM (probability *return)
Boom;(probability* return) = (0.15* 0.10) = 0.015 or 1.5%
Normal ;(probability* return) = (0.70* 0.04) = 0.028 or 2.8%
Recession ; (probability* return) = (0.15* -0.04) = -0.006 or -0.6%
Next, sum up the expected return for each state of the economy to find the expected rate of return on this stock;
= 1.5% + 2.8% -0.6%
= 3.7%
Therefore, the correct answer is choice B.
The actions that Carly displays are considered to be legal as it does not involve of doing things that may be considered for it to be illegal in any way but the way she does these things is highly unethical because she doesn't necessarily need to do this because it could it is not biased and her way of doing things affects her decision that is not in a professional way.
