Answer the following questions and explain

1.) Which of the following types of costs are required to be capitalized under the Uniform Capitalization Rules of Code Sec. 263A? Only one option is correct.

a. Marketing.

b. Distribution.

c. Warehousing.

d. Office maintenance.

2.) On March 1 of the previous year, a parent sold stock with a cost of $8,000 to her child, for $6,000, its fair market value. On September 30 of the current year, the child sold the same stock for $7,000 to Smith, who is unrelated to the parent and child. What is the proper treatment of these transactions?

a. Parent has a $2,000 recognized loss and child has $1,000 recognized gain.

b. Parent has $2,000 recognized loss and child has $0 recognized gain.

c. Parent has $0 recognized loss and child has $1,000 recognized gain.

d. Parent has $0 recognized loss and child has $0 recognized gain.

3.) Robert Corp. granted an incentive stock option for 200 shares to Beverly, an employee, on March 14, Year 15. The option price and FMV on the date of grant was $150. Beverly exercised the option on August 2, Year 17, when the FMV was $180 per share. She sold the stock on September 20, Year 18, for $250 per share. How much gross income did Beverly recognize in Year 15?

a. $30,000

b. $150

c. $0

d. $20,000