Jude Received a $25,000 Distribution from BC Corporation That the Corporation

question 11

Multiple Choice

Jude received a $25,000 distribution from BC Corporation that the corporation identified as $15,000 dividend and $10,000 return of capital.What effect does this distribution have on Jude's taxable income if his basis in the stock of BC is $8,000?

• A)Increase of $25,000
• B)Increase of $17,000
• C)Increase of $15,000
• D)Increase of $10,000

---

Definitions:

Fair Value

The estimated market value of an asset or liability, based on current prices in an open market.

Financial Statements

Formal records that outline the financial activities and condition of a business, including balance sheets, income statements, and cash flow statements.

Adjusted Trial Balance

A list of all account titles and balances after adjustments are made, used to verify the equality of debits and credits and prepare financial statements.