Kristine Owns All of the Stock of a C Corporation

question 27

Multiple Choice

Kristine owns all of the stock of a C corporation which owns the following assets:

* Potential § 1245 recapture of $30,000.
** Straight-line depreciation was used.
Her adjusted basis for her stock is $270,000.Calculate Kristine's recognized gain or loss and classify it as capital or ordinary if she sells her stock for $470,000.

• A)$200,000 ordinary income.
• B)$200,000 capital gain.
• C)$100,000 ordinary income and $100,000 capital gain.
• D)$90,000 ordinary income and $110,000 capital gain.
• E)None of the above.

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Definitions:

Technological Advance

(1) An improvement in the quality of existing products, the invention of entirely new products, or the creation of new or better ways of producing or distributing products. (2) Any improvement in the methods by which resources are combined such that the same quantity of inputs can be made to yield a combination of outputs that is preferred to any combination of outputs that was previously possible.

Freedom of Choice

The right of individuals to make decisions for themselves without undue government restriction.

Society's Wants

The collective desires and needs of a community or society that drive demand and economic activity.