Coop Incorporated owns 40 percent of Chicken Incorporated. Both Coop and Chicken are corporations. Chicken pays Coop a dividend of $10,000 in the current year. Chicken also reports financial accounting earnings of $20,000 for that year. Assume Coop follows the general rule of accounting for investment in Chicken. What is the amount and nature of the booktax difference to Coop associated with its investment in Chicken stock (ignoring the dividends received deduction)?

$2,000 unfavorable

$2,000 favorable

$10,000 unfavorable

$10,000 favorable

None of the choices is correct.

Daniela is a 25 percent partner in the JRD Partnership. On January 1, JRD makes a proportionate distribution of $16,000 cash, inventory with a $16,000 fair value (inside basis $8,000), and accounts receivable with a fair value of $8,000 (inside basis of $12,000) to Daniela. JRD has no liabilities at the date of the distribution. Daniela's basis in her JRD Partnership interest is $20,000. What is Daniela's basis in the distributed inventory and accounts receivable?

$0 inventory, $4,000 accounts receivable

$8,000 inventory, $12,000 accounts receivable

$16,000 inventory, $8,000 accounts receivable

$2,000 inventory, $2,000 accounts receivable