Ball Corporation Owns 80% of Net Corporation's Stock and Jack $$\begin{array} { | l | l | } \hline \text { Ball } & \text { Jack } \\\hline \$ 800,000 & \$ 200,000 \\\hline\end{array}$$

question 15

Multiple Choice

Ball Corporation owns 80% of Net Corporation's stock and Jack owns the remaining 20% of Net Corporation's stock. Ball's basis in the Net stock is $200,000 and Jack's basis in the Net stock is $100,000. Under a plan of complete liquidation, Ball Corporation receives property with an adjusted basis of $400,000 and an FMV of $800,000 and Jack receives property with an adjusted basis of $50,000 and an FMV of $200,000. Ball and Jack's bases in the property received are:

• A) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 800,000 & \$ 200,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 400,000 & \$ 200,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 400,000 & \$ 50,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 200,000 & \$ 100,000 \\
• \hline
• \end{array}\]

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Definitions:

Machine Hours

A measure of production or work volume through the number of hours a machine is operated.

Variable Manufacturing Overhead

The costs of indirect manufacturing that vary with the level of production, such as utilities or materials used in production that are not directly traceable.

Indirect Labor

Indirect Labor is labor costs associated with employees who do not directly work on a product but contribute to the production process or service provision.

Fixed Overhead Costs

Costs that remain constant regardless of the amount of goods produced or sold, including items like rent, salaries, and insurance.