1. Colin receives a lump-sum distribution of employer securities (1,000 shares) from his stock bonus plan in Year 1 worth $140,000 ($140 per share). The total value of his employer contributions over the years was $30,000. Colin sells all of his distributed shares 3 months after he received it as a distribution from the qualified plan. He received proceeds of $150,000 from the sale. How much is Colin’s long-term capital gain upon sale?
a. $110,000
b. $120,000
c. $30,000
d. $40,000
2. Kathy has an account balance in her employer’s cash profit sharing plan of $100,000 (there is no CODA as part of the plan). The plan has a 2-6 graded vesting policy. She has been a participant for three and a half years and has worked for the company for five years. Assuming the plan permits loans, what is the maximum loan that Kathy could take from the plan?
a. $20,000
b. $30,000
c. $40,000
d. $50,000