At the Beginning of the Year, Clampett, Inc

question 112

Multiple Choice

At the beginning of the year, Clampett, Inc. had $100,000 in its AAA, $60,000 of earnings and profits from prior C corporation years. During the year, Clampett, Inc. earned $50,000 of ordinary income and paid $200,000 in distributions to its shareholders. Assume that J. D. owns 25% of Clampett, Inc., his basis in Clampett, Inc. at the beginning of the year is $30,000, and his share of the distribution was $50,000. How much, if any, of the distribution is taxable as a dividend?

• A) $0.
• B) $10,000.
• C) $12,500.
• D) $15,000.
• E) None of the choices are correct.

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Definitions:

Chemoaffinity

The hypothesis that chemical signals guide the connections between neurons during the development of the nervous system.

Imprinting

A rapid and irreversible learning process occurring at a specific life stage that leads to the establishment of a particular behavior.

Gonadal Hormones

hormones produced by the gonads (ovaries in females, testes in males), such as testosterone and estrogen, involved in reproduction and secondary sexual characteristics.

Androgens

A group of hormones that play a role in male traits and reproductive activity; they are present in both males and females but at higher levels in males.