Ashley and Andrew, Equal Shareholders in Parrot Corporation, Receive $250,000

question 44

Multiple Choice

Ashley and Andrew, equal shareholders in Parrot Corporation, receive $250,000 each in distributions on December 31 of the current year.During the current year, Parrot sold an appreciated asset for $500,000 (basis of $150,000) . Payment for the sale of the asset will be made as follows: 50% next year and 50% in the following year, with interest payable at a rate of 7.5%.Before considering the effect of the asset sale, Parrot's current year E & P is $400,000 and it has no accumulated E & P. How much of Ashley's distribution will be taxed as a dividend?

• A)$0.
• B)$200,000.
• C)$250,000.
• D)$425,000.
• E)None of the above.

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Definitions:

Instrumental Strategy

A method employed with the specific aim of achieving a planned outcome or goal.

Masculine Social Role

A set of societal norms dictating the behaviors, values, and attitudes deemed appropriate for men based on their gender.

Traditional

Pertaining to customs, beliefs, or methods that are handed down from generation to generation, often within a particular group or society.

Active Part

The component of a mechanism or system that is directly involved in its operation or function.