Renee, the Sole Shareholder of Indigo Corporation, Sold Her Stock

question 112

Multiple Choice

Renee, the sole shareholder of Indigo Corporation, sold her stock to Chad on July 1 for $180,000. Renee's stock basis at the beginning of the year was $120,000. Indigo made a $60,000 cash distribution to Renee immediately before the sale, while Chad received a $120,000 cash distribution from Indigo on November 1. As of the beginning of the current year, Indigo had $26,000 in accumulated E & P, while current E & P (before distributions) was $90,000. Which of the following statements is correct?

• A) Renee recognizes a $60,000 gain on the sale of the stock.
• B) Renee recognizes a $64,000 gain on the sale of the stock.
• C) Chad recognizes dividend income of $120,000.
• D) Chad recognizes dividend income of $30,000.
• E) None of the above.

---

Definitions:

Competency

A combination of skills, knowledge, and abilities that enable an individual to perform a job effectively.

Succession Management

A strategy for identifying and developing new leaders who can replace old leaders when they leave, retire, or die.

Replacement Planning

The process of identifying and developing successors for key positions within an organization, ensuring continuity and reducing disruption.

Emerging Career Concepts

New and evolving ideas about career paths and employment models that reflect changes in technology, society, and economic conditions.