Oxen Corporation Incurs the Following Transactions ? Oxen Maintains a Valid S Election and Does Not

question 26

Multiple Choice

Oxen Corporation incurs the following transactions. $$\begin{array} { l r } \text { Net income from operations } & \$ 100,000 \\\text { Interest income from savings account } & 3,000 \\\text { Long-term capital gain from sale of securities } & 10,000 \\\text { Short-term capital loss from sale of securities } & 4,000\end{array}$$ ? Oxen maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder, Megan.As a result, Megan must recognize:

• A)Ordinary income of $103,000.
• B)Ordinary income of $103,000 and long-term capital gain of $6,000.
• C)Ordinary income of $103,000, long-term capital gain of $10,000, and $4,000 short-term capital loss.
• D)Ordinary income of $109,000.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if it is held until its expiration date.

Par Value

The nominal face value of a bond or stock as stated by the issuer, often used to determine interest payments.

Interest Rates

Interest rates are the cost of borrowing money expressed as a percentage of the total amount loaned, influencing economic activity by affecting spending and saving behaviors.

Premium

The amount paid for an insurance policy, or the extra cost for financial instruments or securities about their nominal or face value.