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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