The Blue Utilities Company Paid Sue $2,000 for the Right

question 25

Multiple Choice

The Blue Utilities Company paid Sue $2,000 for the right to lay an underground electric cable across her property anytime in the future.

• A)Sue must recognize $2,000 gross income in the current year if the company did not install the cable during the year.
• B)Sue is not required to recognize gross income from the receipt of the funds, but she must reduce her cost basis in the land by $2,000.
• C)Sue must recognize $2,000 gross income in the current year regardless of whether the company installed the cable during the year.
• D)Sue must recognize $2,000 gross income in the current year, and when the cable is installed, she must reduce her cost basis in the land by $2,000.
• E)None of these.

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Definitions:

Hedonism

The conception of the good life that takes pleasure to be the ultimate good.

Ethical Relativism

The thesis that whatever a culture or a society holds about right and wrong is therefore correct, at least for members of that culture or society. See moral (or ethical) relativism.

Nietzsche

Friedrich Nietzsche, a 19th-century German philosopher known for his critique of traditional moral values and the concept of the "will to power."

Courageous Person

An individual who displays bravery and willingness to face fear, pain, risk/danger, uncertainty, or intimidation.