Assume That at the End of 2020, Clampett, Incorporated (An

question 137

Multiple Choice

Assume that at the end of 2020, Clampett, Incorporated (an S corporation) distributes property (fair market value of $43,000, basis of $6,000) to each of its four equal shareholders (aggregate distribution of $172,000) . At the time of the distribution, Clampett, Incorporated, has no corporate earnings and profits and J.D. has a basis of $50,400 in his Clampett, Incorporated, stock. How much total income does J.D. recognize as a result of the distribution?

• A)$0
• B)$6,000
• C)$37,000
• D)$43,000
• E)None of the choices are correct.

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Definitions:

Goods

Goods are tangible products or items that can be sold or bought, providing satisfaction and value to the consumer, ranging from food items to electronic gadgets.

Cannibalization

When a company's new product eats into the sales of one of its existing products.

Disruptive Technology

An innovation that significantly alters the way consumers, industries, or businesses operate, often displacing established technologies.

Sales Volume

The quantity of products or services sold by a company within a specific period, often used to measure business performance.