Candice Owns a Mutual Fund That Reinvests Her Dividends and Capital

question 52

Multiple Choice

Candice owns a mutual fund that reinvests her dividends and capital gains earned during the year.The mutual fund reported to her that her share of earnings was: $500 in dividends,$1,500 in short-term net capital gains,and $1,300 in long-term net capital gains.She reported the items on her tax return and paid the appropriate tax on these earnings.If her basis in the fund was $25,000 at the beginning of the year,what is her basis at the end of the year?

• A)$25,000
• B)$25,500
• C)$27,000
• D)$28,300

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Definitions:

Postdated Check

A check written with a future date, delaying the ability of the recipient to cash or deposit it until that date.

Dishonored

Refers to a financial instrument, such as a check or promissory note, that has been refused payment when presented.

Landlord

A person who owns real property and who rents or leases it to someone else. Also called lessor.