Caesar Owns 100% of Roman Company and His Basis in Its

question 15

Multiple Choice

Caesar owns 100% of Roman Company and his basis in its stock is $35,000.He receives cash of $10,000 and property with FMV of $30,000 and basis of $50,000 in complete liquidation of his ownership interest.As a result of this transaction,which of the following statements is incorrect?

• A)Caesar reports dividend income of $40,000.
• B)Caesar has a nontaxable return of capital of $35,000.
• C)Roman Company records a loss of $20,000.
• D)Caesar reports a capital gain of $5,000.

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Definitions:

Repressed Motives

Desires or drives that have been pushed into the unconscious because they are considered unacceptable or uncomfortable.

Substitute Object

An alternative that replaces or serves in place of an original item or concept.

Reaction Formation

A psychological defense mechanism where an individual unconsciously replaces an unacceptable or threatening impulse with an exaggerated version of its opposite.

Overprotective

Describes behaviors that excessively shield others, particularly children, from potential harm, often limiting their experiences and growth.