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:

Identity Exploration

A phase often occurring in adolescence and young adulthood where individuals actively experiment with and consider various personal, occupational, and philosophical possibilities.

Ego Development

The process of developing a healthy self-identity and the capacity to manage impulses, conflicts, and the perceptions of reality.

Parental Interactions

The various ways in which parents engage, communicate, and connect with their children, influencing their development and well-being.

Recentering

The process of reevaluating and adjusting one's focal point or priorities, often in response to significant life changes.