Scott, age 22, is a full-time student at State College and a candidate for a bachelor's degree. During the current year, he received the following payments: State scholarship (tuition and books), $5,000; Loan from college financial aid office, $2000; cash support from parents, $9,000; Interest income from State of Texas bonds, $500; DEath benefit (not life insurance) from father's employer upon father's death, $10,000. What is Scott's adjusted gross income for the year?

a. 0

b. 5,000

c. 7,000

d. 10,000

e. 26,500

2. On January 10, Year 1, Todd sold stock with a cost basis of $6,000 to his son Trey for $4,000, its market value. On July 31, Year 2, Trey sold the same stock for $5,000 in a bona fide arms length transactihon to Mary, who is unrelated to him or Todd. What is the proper treatment for these transaction?

a. Neither Todd nor Trey has a recognized gain or loss in either Year 1 or Year 2

b. Todd has a recognized loss of 2,000 in Year 1

c. Trey has a recognized gain of 1,000 in Year 2

d. Trey has a recognized gain of 2,000 in Year 2

e. both b and c