Perch Corporation Has Made Paint and Paint Brushes for the Past

question 44

Multiple Choice

Perch Corporation has made paint and paint brushes for the past ten years.Perch Corporation is owned equally by Arnold,an individual,and Acorn Corporation.Perch Corporation has $100,000 of accumulated and current E&P.Both Arnold and Acorn Corporation have a basis in their stock of $10,000.Perch Corporation discontinues the paint brush operation and distributes assets worth $10,000 each to Arnold and Acorn Corporation in redemption of 20% of their stock.Due to the distribution,Arnold and Acorn Corporation must report:

• A) \[\begin{array} { | l | l | }
• \hline\text { Arnold } & \text { Acorn Corporation } \\
• \hline \$ 8,000 \text { capital gain } & \$ 8,000 \text { capital gain } \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline\text { Arnold } & \text { Acorn Corporation } \\
• \hline 88,000 \text { capital gain } & \$ 10,000 \text { dividend } \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline\text { Arnold } & \text { Acorn Corporation } \\
• \hline \$ 10,000 \text { dividend } & \$ 8,000 \text { capital gain } \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Arnold } & \text { Acorn Corporation } \\
• \hline 10,000 \text { dividend } & \$ 10,000 \text { dividend } \\
• \hline
• \end{array}\]

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Definitions:

Ethics of Care

A philosophical perspective that emphasizes the importance of caring, empathy, and maintaining relationships as a moral obligation.

Autonomy

The capacity and right of individuals to make their own choices and govern themselves.

Nonmaleficence

A principle in ethics that requires avoiding actions that cause harm or injury to others, key in medical and healthcare ethics.

Justice

A moral principle regarding fairness and the equitable treatment of all individuals.