Paul, Who Owns All the Stock in Rodgers Corporation, Purchases

question 30

Essay

Paul, who owns all the stock in Rodgers Corporation, purchases a truck from the corporation in January. The truck cost $11,000 and has an adjusted basis of $9,000. Paul pays Rodgers the truck's $7,000 FMV. Paul sells the truck later in the tax year to an unrelated party for $12,000. What is the amount and character of the income that Paul will report on this year's tax return?

---

Definitions:

Montesquieu

A French political philosopher known for his theory of separation of powers, which has influenced many modern democratic governments.

Sociological Theory

A set of ideas that provides an explanation for human society and social behavior through understanding social structures, actions, and changes.

Organic Solidarity

Describes later societies organized around interdependence and the increasing division of labour.

Durkheim

a founding figure in sociology, Emile Durkheim's work focused on social solidarity, the division of labor, and the role of religion in society, among other themes.