QUESTION 8 Mr. Vernon owns stock in Benson Inc., an S corporation. At the beginning of year 1, Mr. Vernon's basis in his Benson stock is $8,000. Benson does not have any debt and did not pay any distributions in either year 1 or year 2. Mr. Vernon's share of income/(loss) from Benson in years 1 and 2 is as follows: YEAR 1 YEAR 2 $ (13,000) $ 15,000 Ignoring any possible Section 199A deduction, how much will Mr. Vernon's Year 2 taxable income increase or decrease overall as a result of his ownership of Benson stock? No increase or decrease. o Increase by $15,000. o Increase by $10,000. o Decrease by $13,000. o Decrease by $5,000. QUESTION 11 Three years ago, Sara Phillips sold land with a $300,000 basis to Warsham Inc. for $117,000 cash. In the current year, Warsham sold the same land to an unrelated buyer for $267,000. If Sara owns 68 percent of Warsham's outstanding stock, what is Warsham's book-tax difference related to the current-year sale? $0 $150,000 favorable $183,000 favorable o $150,000 unfavorable $183,000 unfavorable