At the Beginning of the Year, Clampett, Inc

question 60

Multiple Choice

At the beginning of the year, Clampett, Inc. had $100,000 in its AAA, $60,000 of earnings and profits from prior C corporation years. During the year, Clampett, Inc.earned $50,000 of ordinary income and paid $200,000 in distributions to its shareholders. Assume that J. D. owns 25% of Clampett, Inc., his basis in Clampett, Inc. at thebeginning of the year is $30,000, and his share of the distribution was $50,000. What isJ. D.'s basis in the Clampett, Inc. stock after these transactions?

• A) $5,000.
• B) $12,500.
• C) $0.
• D) $15,000.
• E) None of the choices are correct.

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Definitions:

Misinformation

False or inaccurate information that is spread intentionally or unintentionally, without the intent to deceive.

Vividly Remembered

The act of recalling memories with exceptional clarity and detail, as if experiencing the moment all over again.

Misleading Information

Refers to false or deceptive information that can affect memory, perception, or understanding, often studied in the context of eyewitness testimony and media.

Loftus

Elizabeth Loftus is a cognitive psychologist and expert on human memory, known for her research on the malleability of human memory and the misinformation effect.