47- Wanda is the Chief Executive Officer of Pink corporation, a publicly traded, calendar year C corporation. For the current year, Wanda's compensation package consists of:

Cash compensation	$ 2,500,000
Nontaxable fringe benefits	250,000
Taxable fringe benefits	150,000
Bonus tied to company performance	2,000,000

How much of Wanda's compensation is deductible by Pink Corporation?

a.$4,900,000.

b.$1,250,000.

c.$1,000,000.

d.$3,250,000.

48- Rick transferred the following assets and liabilities to Warbler Corporation.

	Adjusted Basis	Fair Market Value
Building	$210,000	$225,000
Equipment	45,000	75,000
Trucks	15,000	30,000
Mortgage (held for four years) on building	30,000	30,000

In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000).

a.Rick has a recognized gain of $60,000.

b.Rick's basis in the stock of Warbler Corporation is $270,000.

c.Rick has a recognized gain of $75,000.

d.Warbler Corporation has the same basis in the assets received as Rick does in the stock.