Marilyn Owns 100% of the Stock of Lilac, Inc

question 24

Essay

Marilyn owns 100% of the stock of Lilac, Inc., with an adjusted basis of $45,000. She receives a cash distribution of
$160,000 from Lilac when its earnings and profits are $90,000.
a. What is Marilyn's dividend income?
b. What is Marilyn's recognized gain or loss?
c. What is Marilyn's adjusted basis for her stock after the distribution?

---

Definitions:

Initial Endowment

The initial allocation or distribution of resources, goods, or wealth among individuals or entities at the start of an economic experiment or model.

Apples

A type of fruit commonly consumed fresh, cooked, or as juice, recognized for its sweet or tart flavor.

Pareto Optimal Allocation

A condition of resource distribution in which no one person can be made better off without causing detriment to at least another person.

Endowed

In economics, it refers to the initial allocation of income, wealth, or goods to an individual or an entity at the start of an economic analysis or experiment.