Ted and Alice Were in the Process of Negotiating a Divorce

question 43

Essay

Ted and Alice were in the process of negotiating a divorce agreement. They own bonds with a basis of $800,000 and a fair market value of $800,000. They also own common stock with a basis of $600,000 and a fair market value of
$800,000. Alice is trying to decide whether to bargain to receive the bonds or the stock. She has no plans for selling the bonds or stock, whichever she receives.
a. Which would you advise Alice to receive?
b. From Ted's perspective, are the assets of equal value?

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Definitions:

Operating Departments

Operating Departments are the units or divisions within an organization responsible for carrying out its primary business activities.