Kristine Owns All of the Stock of a C Corporation

question 22

Multiple Choice

Kristine owns all of the stock of a C corporation which owns the following assets. $\begin{array}{lrr}&\text { Adjusted Basis Fair }&\text { Market Value }\\\text { Accounts receivable } & \$-0- & \$ 60,000 \\\text { Inventory } & 20,000 & 30,000 \\\text { Machinery and equipment* } & 50,000 & 90,000 \\\text { Buil dings** } & 120,000 & 170,000 \\\text { Land } & 80,000 & 140,000 \\& \$ 270,000 & \$ 490,000\end{array}$ * Potential § 1245 recapture of $45,000. ** Straight-line depreciation was used.
Her adjusted basis for her stock is $270,000.Calculate Kristine's recognized gain or loss and classify it as capital or ordinary if she sells her stock for $500,000.

• A)$230,000 ordinary income.
• B)$230,000 capital gain.
• C)$115,000 ordinary income and $115,000 capital gain.
• D)?$110,000 ordinary income and $120,000 capital gain.

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Definitions:

Big Five

A model describing human personality in terms of five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

MARS Model

A framework identifying four factors—motivation, ability, role perceptions, and situational factors—that collectively affect individual performance.

Locus of Control

A psychological concept that refers to how strongly people believe they have control over the situations and experiences that affect their lives.

Big Five

A model outlining five broad dimensions of personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.