Nick Owns 60% of the Agate Company for Which His

question 90

Multiple Choice

Nick owns 60% of the Agate Company for which his basis is $500,000.He sells one-fourth of his ownership interest to Bernice for $190,000.Which of the following statements is correct?

• A)If Agate is an S corporation,Nick has a recognized gain of $65,000,some of which may be capital and some of which may be ordinary income.
• B)If Agate is a C corporation,Nick has a recognized capital gain of $65,000.
• C)If Agate is a partnership,Nick has a recognized capital gain of $65,000.
• D)Only b.and c.are correct.
• E)a. ,b. ,and c.are correct.

---

Definitions:

Buyers

Individuals or entities that exchange money for goods or services.

Perfect Competitor

A market structure where numerous small firms compete against each other, and products are homogenous, with no single firm able to influence the market price.

Monopolistic Competitor

A firm in a market structure where many companies sell products that are similar but not perfect substitutes, leading to some degree of market power.

Long Run

A period in economics where all factors of production and costs are variable, allowing for adjustments in production levels.