Glenda Is the Sole Shareholder of Condor Corporation

question 33

Multiple Choice

Glenda is the sole shareholder of Condor Corporation. She sold her stock to Melissa on October 31 for $150,000. Glenda's basis in Condor stock was $50,000 at the start of the year. Condor distributed land to Glenda immediately before the sale. Condor's basis in the land was $20,000 (fair market value of $25,000) . On December 31, Melissa received a $75,000 cash distribution from Condor. During the year, Condor has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true?

• A) Glenda recognizes a $110,000 gain on the sale of her stock.
• B) Glenda recognizes a $100,000 gain on the sale of her stock.
• C) Melissa receives $5,000 of dividend income.
• D) Glenda receives $20,000 of dividend income.
• E) None of the above.

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Definitions:

Variable Pay

Compensation that is based on performance or outcomes, differing from fixed salaries and can include bonuses, commissions, or profit-sharing.

Profit-sharing Plan

A profit-sharing plan is an incentive program in which employees receive a share of the company's profits, typically distributed annually.

Total Commitment

A state or condition of being fully dedicated or completely loyal to a cause, activity, or the duties and responsibilities of a role or position.

Labour Cost Savings

Reductions achieved in the expenses related to employing labor, often through efficiencies, negotiations, or changes in work practices, without compromising productivity.