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

question 131

Multiple Choice

Assume that at the end of 2020, Clampett, Incorporated (an S corporation) distributes long-term capital gain property (fair market value of $40,000, basis of $25,000) to each of its four equal shareholders (aggregate distribution of $160,000) . At the time of the distribution, Clampett, Incorporated, has no corporate earnings and profits and J.D. has a basis of $15,000 in his Clampett, Incorporated, stock. How much total income does J.D. recognize as a result of the distribution?

• A)$0
• B)$15,000
• C)$25,000
• D)$40,000
• E)None of the choices are correct.

---

Definitions:

Molecule

The smallest unit of a chemical substance that retains its chemical properties, consisting of two or more atoms bonded together.

Compound

A substance made up of two or more elements chemically combined in fixed proportions.

Sodium Chloride

A chemical compound known as table salt, composed of sodium and chlorine atoms, essential for human health but required in moderation.

Molecule

The smallest unit of a chemical compound that can exist, consisting of two or more atoms bonded together.