General Inertia Corporation Made a Pro Rata Distribution of $50,000

question 111

Multiple Choice

General Inertia Corporation made a pro rata distribution of $50,000 to Tiara, Incorporated in partial liquidation of the company on December 31, 20X3. Tiara, Incorporated owns 500 shares (50 percent) of General Inertia. The distribution was in exchange for 250 shares of Tiara's stock in the company. After the partial liquidation, Tiara continued to own 50percent of the remaining stock in General Inertia. At the time of the distribution, the shares had a fair market value of $200 per share. Tiara's income tax basis in the shares was $100 per share. General Inertia had total E&P of $800,000 at the time of the distribution. What amount of dividend or capital gain does Tiara recognize because of the transaction?

• A)Tiara does not recognize any dividend income or capital gain.
• B)Tiara recognizes capital gain of $50,000.
• C)Tiara recognizes dividend income of $50,000.
• D)Tiara recognizes capital gain of $25,000.

---

Definitions:

Eating Disorder

A mental health condition characterized by unhealthy, obsessive, or disordered eating habits, which negatively impact an individual's physical health and emotional well-being.

Print Media Campaign

An advertising or promotional initiative conducted through printed materials, such as newspapers, magazines, flyers, or posters, to communicate a specific message.

Message Credibility

The perceived trustworthiness and expertise of the source of information, impacting the effectiveness and persuasive power of a message.

Counter-Attitudinal Behavior

Acting in a way that contradicts one's personal beliefs or attitudes, often leading to cognitive dissonance.