Since Grocer Services is a corporation and the inventory exception is met, one-half of the
appreciation on the food may be claimed, or $300 [1/2 of ($8,100 – $7,500)]. Therefore,
$7,800 ($7,500 + $300 appreciation) is allowed as a deduction. Because the Acme stock is
long-term capital gain property and not tangible personalty, the deduction is based on fair
market value ($6,750). The deduction for the delivery van, which is not a capital asset, is
limited to the lesser of adjusted basis or fair market value ($5,700). Thus, $7,800 + $6,750 +
$5,700 = $20,250.
(TCO 2) Red Corporation, which owns stock in Blue Corporation, had net operating income
of $500,000 for the year. Blue pays Red a dividend of $50,000. Red takes a dividends
received deduction of $35,000. Which of the following statements is correct?