Devon Owns 40% of the Agate Company for Which His

question 27

Multiple Choice

Devon owns 40% of the Agate Company for which his basis is $100,000. He sells one-half of his ownership interest to Bernice for $80,000. Which of the following statements is correct?

• A) If Agate is an S corporation, Devon has a recognized gain of $30,000, some of which may be capital and some of which may be ordinary income.
• B) If Agate is a C corporation, Devon has a recognized capital gain of $30,000.
• C) If Agate is a partnership, Devon has a recognized capital gain of $30,000.
• D) Only b. and c. are correct.
• E) a., b., and c. are correct.