Glenda Is the Sole Shareholder of Condor Corporation

question 40

Multiple Choice

Glenda is the sole shareholder of Condor Corporation. She sold her stock to Melissa on October 31 for $150,000. Glenda's basis in Condor stock was $50,000 at the start of the year. Condor distributed land to Glenda immediately before the sale. Condor's basis in the land was $20,000 (fair market value of $25,000) . On December 31, Melissa received a $75,000 cash distribution from Condor. During the year, Condor has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true?

• A) Glenda recognizes a $110,000 gain on the sale of her stock.
• B) Glenda recognizes a $100,000 gain on the sale of her stock.
• C) Melissa receives $5,000 of dividend income.
• D) Glenda receives $20,000 of dividend income.
• E) None of these.

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Definitions:

Income Side

The aspect of national accounts that deals with how income is generated, distributed, and used in an economy, typically measuring aspects like wages, rents, and profits.

Aggregate Income

The total income earned by all individuals and entities in an economy over a specific time period.

Final Output

The total value of goods and services produced by an economy after adjusting for intermediate goods used in production, representing the end products available for consumption, investment, exports, and government spending.

Aggregate Expenditure

The total spending on goods and services in an economy during a specific period, including consumer spending, investment, government spending, and net exports.