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:

Long-run Phillips Curve

An economic concept stating that in the long run, there is no trade-off between inflation and unemployment; the curve is vertical at the natural rate of unemployment.

Inflation

How rapidly the across-the-board prices of goods and services increase, impairing fiscal buying ability.

Unemployment

Unemployment occurs when individuals who are capable of working and are looking for a job are unable to find employment. It is a key economic indicator.

Money Neutral

The principle that changes in the money supply only affect nominal variables and not real variables like output in the long run.