Dixie Corporation Distributes $31,000 to Its Sole Shareholder, Sally

question 40

Multiple Choice

Dixie Corporation distributes $31,000 to its sole shareholder, Sally. At the time of the distribution, Dixie's E&P is $25,000 and Sally's basis in her Dixie stock is $10,000. Sally's basis in her Dixie stock after the distribution is

• A)$4,000.
• B)$10,000.
• C)$25,000.
• D)$31,000.

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Definitions:

International Trade

The exchange of goods and services between countries.

Trade Balance

The difference between the monetary value of a nation's exports and imports over a certain timeframe.

Free Markets

Economic systems in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

Joseph Stiglitz

An American economist and professor known for his work on income distribution, risk, and information economics, and a recipient of the Nobel Memorial Prize in Economic Sciences.