Bev and Cabel Each Own One-Half of the Stock of Finch

question 92

Multiple Choice

Bev and Cabel each own one-half of the stock of Finch, Inc., an S corporation with no accumulated E & P.Bev's basis in the Finch stock is $225,000.Finch's taxable income for the current year is $100,000, and it distributes $180,000 to each shareholder.Bev's stock basis at the end of the year is:

• A)$0.
• B)$45,000.
• C)$95,000.
• D)$100,000.

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Definitions:

Alienation

The feeling of being isolated and disconnected from one’s social surroundings or from one's own work or products of work.

Co-optation

A strategy by which a group incorporates individuals from another, often oppositional group, to reduce threats or to gain their perspectives, sometimes diluting the original group's goals.

Coercion

The practice of forcing another party to act in an involuntary manner by use of threats, intimidation, or some other form of pressure or force.

Negotiation

The process by which parties with differing interests and objectives discuss an issue in an attempt to reach a mutually acceptable agreement.