Marilyn Owns 100% of the Stock of Lilac, Inc

question 24

Essay

Marilyn owns 100% of the stock of Lilac, Inc., with an adjusted basis of $45,000. She receives a cash distribution of
$160,000 from Lilac when its earnings and profits are $90,000.
a. What is Marilyn's dividend income?
b. What is Marilyn's recognized gain or loss?
c. What is Marilyn's adjusted basis for her stock after the distribution?

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Definitions:

Patent Holder

An individual or entity that legally owns the rights to an invention as recognized by a patent.

Assignee

An individual or entity to whom rights or interests have been transferred by another, known as the assignor.

Assignor

A person or entity that transfers rights or interests in a contract or property to another party, known as the assignee.

Obligations

Duties and responsibilities imposed by law or contract.