Jason Sells Stock with an Adjusted Basis of $66,000 to JJ

question 68

Multiple Choice

Jason sells stock with an adjusted basis of $66,000 to JJ Inc.,his 60% owned corporation,for its fair market value of $60,000.JJ Inc.sells the stock three years later for $67,000.JJ Inc.'s recognized gain or loss on the sale will be

• A)$0.
• B)($3,000).
• C)$1,000.
• D)$4,000.

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Definitions:

Small-Company Stocks

Stocks of companies with relatively small market capitalization, often characterized by higher volatility and potentially higher returns.

Canadian Common Stocks

Shares of ownership in Canadian corporations that entitle holders to dividends and voting rights.

Risk

The exposure to uncertainty or the variability of returns associated with a given asset or investment.