On May 18,of Last Year,Yuji Sold Unlisted Stock with a Cost

question 114

Multiple Choice

On May 18,of last year,Yuji sold unlisted stock with a cost of $12,000 for $30,000.Yuji collected $10,000 initially and is scheduled to receive $5,000 each year for four years starting this year plus an acceptable rate of interest.After receiving the first scheduled $5,000 payment,Yuji was unable to collect any further payments.After incurring legal fees of $500,Yuji recovered a portion of the stock valued at $13,000.Yuji's basis in the recovered stock is

• A)$6,500.
• B)$7,000.
• C)$12,500.
• D)$13,000.

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Definitions:

Authority

Refers to the right or power assigned to an individual or entity to make decisions, give orders, or control something or someone.

Reimbursement

A repayment for money spent or losses incurred, often from one party to another as compensation.

Independent Contractor

An individual or entity contracted to perform work for another entity as a non-employee, responsible for their own tax obligations and not subject to the hiring entity’s control over how the work is performed.

Contract Authorization

The process or act of giving official or legal approval to a contract, enabling it to be valid and enforceable.