Kelly owns 500 shares of Boston Corporation common stock which was purchased on March 20, 2000, for $70,000. On August 8 of the current year, she receives a distribution of 500 stock rights. Each stock right has a $10 FMV and the FMV of the Boston common stock is $40 per share. With each stock right, she may acquire on share of Boston common stock for $110. a. How much gross income must Kelly recognize?
b. What is the basis of each stock right​ received?
c. If she sells the 100 stock rights for $9,000​, what is her​ gain?
d. If she exercises the 100 stock rights on September 8​, what is the basis of the 100 shares she receives and when does the holding period for those shares​ start?

a. How much gross income must Kelly recognize?

$0, the distribution will not increase her gross income.

b. What is the basis of each stock right​ received?

{[(500 x $10)/ (500 x $10 + 500 x $40)] x $70,000} / 500 shares= $14,000 / 500 = $28

c. If she sells the 100 stock rights for $9,000​, what is her​ gain?

gain = $9,000 - (100 x $28) = $6,200

d. If she exercises the 100 stock rights on September 8​, what is the basis of the 100 shares she receives and when does the holding period for those shares​ start?

basis = $2,800 + (100 x $110) = $13,800

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.