T Owns All of the Stock of Both B and S

question 33

Multiple Choice

T owns all of the stock of both B and S Corporations.T, desiring to bail E&P out of B Corporation, sold stock of B with a basis of $16,000 to S for $50,000.Unfortunately, the sale did not qualify for sale treatment due to the special provisions of § 304 concerning redemptions by related corporations.Assuming B has E&P of $40,000 and S has a deficit in E&P of ($25,000) , T will report a dividend of

• A)$50,000
• B)$34,000
• C)$40,000
• D)$15,000
• E)None of the above

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Definitions:

Wagering Agreement

A contract centered around betting or gambling where the outcome depends on an uncertain event.

Contract

A legally binding agreement between two or more parties that outlines obligations and rights of the involved parties.

Co-insurance Clause

A provision in an insurance policy that requires the policyholder to bear a portion of the loss, promoting insured responsibility.

Fireproof

Made of materials that are resistant to catching fire or are capable of withstanding high temperatures without being damaged.