1. The Ajax Corporation distributes 50 shares of its preferred stock to shareholder Thomas Turner, who owns 100 shares Ajax common stock. The distribution qualifies as a nontaxable stock dividend. On the date of distribution, the Ajax common stock has a market value per share of $10 and the preferred stock has a market value per share of $3. Assume that Thomas has pre- distribution basis of $5,000 for his common stock. What will be Thomas' basis per share for the preferred stock after accounting for the tax-free distribution? A. $1,000 B. 650 150 D, 450 E. None of the above U 2. Single taxpayer Bobby Betts, age 72, reports pension gross income of $19,000, taxable interest income of $2,000, nontaxable municipal bond interest income of $1,000, and Social Security benefit payments of $12,000. How much, if any of Bobby's Social Security benefit payments will constitute taxable gross income on Form 1040? A. $ 12,000 B. 1,500 C. 6,000 D. 10,200 E. None of the above 3. The Ajax Company provides employer-paid group term life insurance coverage for all employees in a coverage amount equal to double the employee's annual salary. Employee Terry Taylor, age 62, earns annual salary of $40,000. The Ajax Company pays annual premiums of $450 for Terry's policy. How much additional W-2 income should the Ajax Company add to Terry's W-2 for the Year? A. $ 240 B. 450 C. 480 D. 630 E. None of the above