Mary, age 50, has an ira with an account balance of $165,000. mary has recently been diagnosed with an unusual disease that will require treatment costing $50,000, which she will have to pay personally. mary's agi will be $100,000 this year. which of the following statements are true?

1. mary can immediately borrow up to $50,000 from her account and repay within five years.
2. mary can distribute $50,000 subject to income tax but not subject to the 10% penalty because it will be used to pay medical expenses.
a) 1 only.
b) 2 only.
c) both 1 and 2.
d) neither 1 nor 2.

Grey company holds an overdue note receivable of $800,000 plus recorded accrued interest of $64,000. the effective interest rate is 8%. as the result of a court-imposed settlement on december 31, year 3, grey agreed to the following restructuring arrangement: reduced the principal obligation to $600,000.forgave the $64,000 accrued interest.extended the maturity date to december 31, year 5.annual interest of $40,000 is to be paid to grey on december 31, year 4 and year 5. the present value of the interest and principal payments to be received by grey company discounted for two years at 8% is $585,734. grey does not elect the fair value option for reporting the debt modification. on december 31, year 3, grey would recognize a valuation allowance for impaired loans of