Assume That at the End of 2017,Clampett,Inc

question 117

Multiple Choice

Assume that at the end of 2017,Clampett,Inc.(an S corporation) distributes property (fair market value of $40,000,basis of $5,000) to each of its four equal shareholders (aggregate distribution of $160,000) .At the time of the distribution,Clampett,Inc.has no corporate E&P and J.D.has a basis of $50,000 in his Clampett,Inc.stock.How much income does J.D.recognize as a result of the distribution?

• A) $0.
• B) $5,000.
• C) $35,000.
• D) $40,000.
• E) None of the choices are correct.

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Definitions:

Enforcing Court Judgments

The process through which the successful party in a lawsuit seeks to have the court’s decision carried out or complied with by the losing party.

Directed Verdict

A ruling by a judge, typically on a motion by the defense, that the jury must decide in favor of one party because the evidence is insufficient to support any other legal decision.

Enforcing Court Judgments

The legal process of ensuring compliance with a court's decision, involving measures such as garnishment, liens, or seizing assets.

Civil Trial

A legal proceeding in which a plaintiff seeks compensation or relief from a defendant in matters not involving criminal charges.