At the Beginning of the Year, Clampett, Incorporated, Had $100,000

question 35

Multiple Choice

At the beginning of the year, Clampett, Incorporated, had $100,000 in its AAA and $60,000 of earnings and profits from prior C corporation years. During the year, Clampett, Incorporated, earned $50,000 of ordinary income and paid $200,000 in distributions to its shareholders. Assume that J.D. owns 25percent of Clampett, Incorporated, his basis in Clampett, Incorporated, at the beginning of the year is $30,000, and his share of the distribution was $50,000. What is J.D.'s basis in the Clampett, Incorporated, stock after these transactions?

• A)$0
• B)$5,000
• C)$12,500
• D)$15,000
• E)None of the choices are correct.

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Definitions:

Model Nonprofit Corporation Act

A guideline for the governance of nonprofit organizations, providing a standard legal framework for their formation and operation.

Nonprofit Corporation

An entity designed to operate without the objective of making profits for its owners or members, often focused on serving the community or public interest.

Minimum Number

The smallest quantity or amount permitted or required under certain conditions or for a specific process.

Corporation by Estoppel

A legal doctrine that prevents a party from denying the corporation's existence for the purposes of a transaction if they have acted as if the corporation existed.