Kristine Owns All of the Stock of a C Corporation

question 36

Multiple Choice

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

Seminal Vesicle

The seminal vesicles are a pair of glands in males that secrete a significant portion of the fluid that becomes semen, providing nutrients for sperm and enhancing their motility.

Uterus

A female reproductive organ where the development of the fetus takes place during pregnancy.

Yolk Sac

An extra-embryonic membrane that provides nutrients to the early embryo; it is a critical structure in the development of many vertebrates.

Chorion

The outermost fetal membrane in many vertebrates, including humans, contributing to the formation of the placenta.