Elijah Owns 20% of Park Corporation's Single Class of Stock

question 66

Multiple Choice

Elijah owns 20% of Park Corporation's single class of stock. Elijah's basis in the stock is $8,000. Park's E&P is $28,000. If Park redeems all of Elijah's stock for $48,000, Elijah must report dividend income of

• A)$0.
• B)$28,000.
• C)$40,000.
• D)$48,000.

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Definitions:

Independent Contractor

A person or entity contracted to perform work for another entity as a non-employee, offering services under terms specified in a contract.

Per-Project Basis

A form of employment or contract work where tasks are completed and paid for individually, rather than ongoing employment.

Chef

A professional cook, typically the chief cook in a restaurant or hotel, responsible for menu planning, food preparation, and kitchen management.

Contractual Capacity

Contractual capacity is the legal ability of a person or entity to enter into a contract, with sufficient understanding and agreement to the terms.