Reggie Owns All the Stock of Amethyst, Inc

question 123

True/False

Reggie owns all the stock of Amethyst, Inc.(adjusted basis of $80,000).If he receives a distribution from Amethyst of $70,000 and corporate earnings and profits are $18,000, Reggie has a capital gain of $8,000 and an adjusted basis for his Amethyst stock of $0.

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Definitions:

Dividend

Revenue shared by a company with its shareholders, often as a disbursement of profits.

Financial Planning

The process of creating and managing a strategic plan for a person's or organization's financial affairs.

Short-Term

Relating to or occurring over a short period of time, typically less than one year, often used in finance to describe assets or liabilities.