This Year, Jiang, the Sole Shareholder of a Calendar Year

question 16

Multiple Choice

This year, Jiang, the sole shareholder of a calendar year S corporation, received a distribution of $17,000. On December 31 of the prior year, his stock basis was $3,000. The corporation earned $12,000 ordinary income during the year. It has no accumulated E&P. Which statement is correct? Ignore the 20% QBI deduction.

• A) Jiang recognizes a $2,000 LTCG.
• B) Jiang's stock basis will be $2,000.
• C) Jiang's ordinary income is $15,000.
• D) Jiang's return of capital is $11,000.

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Definitions:

Eyespots

Markings found on the bodies of some animals, resembling eyes, thought to deter predators or attract mates.

Marion Petrie

A researcher known for her work on sexual selection, particularly regarding the role of peacock tail feathers in attracting mates.

Sexual Selection Model

A theoretical construct that explains how certain traits are favored because they increase an individual's chances of reproductive success.

Direct Benefits

Advantages that directly affect an individual's survival or reproduction, typically gained through mate choice or specific behaviors.