During 2012, Dana Rippel, the Sole Shareholder of a Calendar

question 98

Multiple Choice

During 2012, Dana Rippel, the sole shareholder of a calendar year S corporation, received a distribution of $16,000.On December 31, 2011, her stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

• A)Rippel recognizes a $1,000 LTCG.
• B)Rippel's stock basis will be $2,000.
• C)Rippel's ordinary income is $15,000.
• D)Rippel's return of capital is $11,000.

Understand the basic principles of preparing financial statements and the effects of certain transactions on these statements.

Recognize the primary responsibilities for the information provided in financial statements.

Understand the cash flow statement and differentiate between operating, investing, and financing activities.

Understand and calculate net cash flow from investing activities.

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Definitions:

Eminent Domain

The power of a government to take private property for public use, with compensation provided to the owner.

Due Process

A constitutional principle that requires the government to respect all legal rights that are owed to a person, ensuring fair treatment through the judicial system.

Equal Protection

A legal principle, under the Fourteenth Amendment, that requires states to treat all individuals within its jurisdiction with equal application of the law.

Superfund

A United States federal government program designed to fund the cleanup of sites contaminated with hazardous substances and pollutants.