In January of the Current Year, Rae Purchases 100% of Sun

question 11

Essay

In January of the current year, Rae purchases 100% of Sun Corporation stock for $30,000. Sun Corporation reports taxable income of $25,000 in the current year, on which it pays tax of $3,750. None of the remaining $21,250 is distributed to Rae. However, on January 1 of the next year, Rae sells her stock to Lee for $51,250. What are the tax consequences to Rae of the sale?

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Definitions:

High Achievement

The attainment of superior levels of performance or accomplishments, often in a professional or personal context.

High Power

A state or condition of having significant control, authority, or influence over others.

Low Affiliation

A term indicating a reduced concern or need for forming close or supportive relationships with others.

Need for Achievement

A psychological trait that drives individuals to pursue and meet goals or standards of excellence, often motivating behavior in competitive environments.