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:

Legitimacy

The rightful status, accepted and recognized by the public or law, that gives a government or ruling body authority over its subjects.

Liberty

The condition of liberty in society from authoritarian limitations on one's lifestyle, conduct, or political opinions.

Individual

Referring to a single person or thing, distinct from others in a group or category.

Authority

The power or right to give orders, make decisions, and enforce obedience.