At the Beginning of the Year,Clampett,Inc

question 22

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.What is J.D.'s basis in the Clampett,Inc.stock after these transactions?

• A)$0.
• B)$5,000.
• C)$12,500.
• D)$15,000.
• E)None of the choices are correct.

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Definitions:

External Oblique

A muscle in the abdomen that helps rotate the trunk and flex the vertebral column.

Scapula

The flat, triangular bone located in the upper back, commonly known as the shoulder blade.

Rhomboid Major

A skeletal muscle located in the upper back that connects the spine to the shoulder blade, aiding in retraction of the scapula.

Teres Minor

A small muscle of the rotator cuff that assists in the rotation and stabilization of the shoulder joint.