Dixie Corporation Distributes $31,000 to Its Sole Shareholder, Sally

question 40

Multiple Choice

Dixie Corporation distributes $31,000 to its sole shareholder, Sally. At the time of the distribution, Dixie's E&P is $25,000 and Sally's basis in her Dixie stock is $10,000. Sally's basis in her Dixie stock after the distribution is

• A)$4,000.
• B)$10,000.
• C)$25,000.
• D)$31,000.

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Definitions:

Solution

Fluid (the solvent) that contains a dissolved solid (the solute).

Tonicity

The ability of a surrounding solution to cause a cell to gain or lose water, depending on the concentration of solutes.

Turgor Pressure

The pressure of water pushing the plasma membrane against the cell wall of a plant cell, contributing to the cell’s rigidity.

Plasmolysis

The process in which plant cells lose water in a hypertonic solution, resulting in the shrinkage of the cell membrane away from the cell wall.