Abada Inc Has a $925,000 Basis in 100% of the Stock

question 63

True/False

Abada Inc. has a $925,000 basis in 100% of the stock of AbWest Inc., which derives all its income from a manufacturing activity. If Abada determines that the AbWest stock is worthless, it can recognize a $925,000 ordinary loss.

---

Definitions:

Intense Fear

A strong, often overwhelming emotion caused by anticipation or awareness of danger and threat, leading to extreme anxiety or discomfort.

Purging Behaviors

Actions such as self-induced vomiting, excessive exercise, or misuse of laxatives, undertaken in order to eliminate consumed food and prevent weight gain, often associated with eating disorders.

DSM-IV

The Diagnostic and Statistical Manual of Mental Disorders, 4th Edition, a manual published by the American Psychiatric Association detailing diagnostic criteria for mental disorders.

Anorexia Nervosa

An eating disorder characterized by an abnormally low body weight, fear of gaining weight, and a distorted perception of weight or shape.