Kristine Owns All of the Stock of a C Corporation

question 34

Multiple Choice

Kristine owns all of the stock of a C corporation which owns the following assets: * Potential § 1245 recapture of $45,000.
** 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 $500,000.

• A) $230,000 ordinary income.
• B) $230,000 capital gain.
• C) $115,000 ordinary income and $115,000 capital gain.
• D) $110,000 ordinary income and $120,000 capital gain.
• E) None of the above.

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