Blue Corporation Distributes Property to Its Sole Shareholder, Zeke

question 41

Multiple Choice

Blue Corporation distributes property to its sole shareholder, Zeke. The property has a fair market value of $450,000, an adjusted basis of $305,000, and is subject to a liability of $250,000. Current E & P is $550,000. With respect to the distribution, Blue has a gain of:

• A) $200,000 and Zeke has dividend income of $450,000.
• B) $145,000 and Zeke's basis is the distributed property is $305,000.
• C) $200,000 and Zeke's basis in the distributed property is $450,000.
• D) $145,000 and Zeke has dividend income of $200,000.
• E) None of the above.

Distinguish between substitution and income effects when there is a change in income or prices.

Identify the properties of various types of goods and their demand curves (e.g., Giffen goods, substitutes).

Comprehend the impact of price changes on consumer's budget constraint and choices.

Interpret Engel curves and their significance in economic theory.

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Definitions:

Voluntary Movement

Movement controlled by the individual's conscious mind, primarily involving the skeletal muscle system.

Homeostasis

The process by which a living organism or cell maintains a stable internal environment despite changes in external conditions.

Reticular Activating System

A network of neurons in the brainstem that plays a key role in regulating wakefulness and sleep-wake transitions.

Cerebral Cortex

The outer layer of the cerebrum composed of gray matter and consisting mainly of nerve cell bodies.