Both Thu and Tuan Own One-Half of the Stock of Wren

question 41

Multiple Choice

Both Thu and Tuan own one-half of the stock of Wren, Inc., a C corporation. Each shareholder holds a stock basis of $175,000. Wren has accumulated E & P of $300,000. Wren's taxable income for the current year is $100,000, and it distributes $75,000 to each shareholder. Thu's stock basis at the end of the year is:

• A) $0.
• B) $100,000.
• C) $150,000.
• D) $175,000.

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Definitions:

Bliss Point

The optimal quantity of consumption where any further increase or decrease would lead to lower satisfaction or utility.

Absolute Values

A mathematical operation that measures the distance of a number from zero on the number line, disregarding direction.

Indifference Curve

A graphical representation showing different combinations of two goods that provide an individual with the same level of satisfaction.

Favorite Bundle

In economic theory, it refers to the most preferred combination of goods and services by an individual or consumer.