The Drabb Trust Owns a Plot of Business-Related Land, Basis

question 90

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 12% 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.

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Definitions:

Fear

An emotional response to perceived threats or danger, often triggering a fight or flight response.

James-Lange Theory

A theory of emotion that suggests emotions arise from physiological reactions to events, rather than causing those reactions.

Physiological Arousal

The body's response to a stimulus, involving increased activity in various systems, such as heart rate and adrenaline production.

Intense Anger

A powerful emotion characterized by strong feelings of dissatisfaction, frustration, or hostility.