The Drabb Trust Owns a Plot of Business-Related Land,basis of $50,000,fair

question 126

Multiple Choice

The Drabb Trust owns a plot of business-related land,basis of $50,000,fair market value of $35,000.Drabb is subject to a 35% marginal income tax rate.Its sole beneficiary,Eddie,is subject to a 15% marginal income tax rate.Drabb's current-year distributable net income is $95,000.What is the most preferable action for the trustee of Drabb to take,considering only the related tax consequences?

• A)Distribute the land to Eddie and make a § 643(e) election.
• B)Distribute the land to Eddie and make no § 643(e) election.
• C)Sell the land to a third party.
• D)Neither sell nor distribute the land.

---

Definitions:

Normative Social Influence

Involves the impact of social norms and the desire to be accepted by others on an individual's behavior.

Group Polarization

The phenomenon where the attitude of a group becomes more extreme than the initial inclination of its members after discussing a topic.

Obedience

The act of following orders or directives from authority figures, sometimes regardless of personal conscience.

Shock Levels

The varying intensities of electrical shock used in experiments or medical therapy, often to study pain response or to treat certain conditions.