Kathy Was a Shareholder in Matrix, Inc

question 13

Multiple Choice

Kathy was a shareholder in Matrix, Inc., when she sold the corporation a commercial building.The building cost $500,000 and the balance in the accumulated depreciation account was $400,000. Matrix, Inc., paid $100,000 in the year of sale and gave Kathy a note for $400,000 plus adequate interest due in 2014.

• A)Because Kathy is a shareholder in Matrix, she cannot report the gain by the installment method.
• B)Generally, if Kathy owned 100% of the Matrix stock, Kathy cannot use the installment method.
• C)Generally, if Kathy owned only 60% rather than 100% of the Matrix stock, she could use the installment method.
• D)Kathy cannot use the installment method to report the gain because the realized gain is equal to the depreciation she claimed on the building.
• E)None of the above.

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Definitions:

Easygoing Temperaments

Refers to personality traits characterized by calmness, flexibility, and a relaxed approach to life.

Wary of Strangers

A cautious or suspicious attitude towards unfamiliar people, often considered a natural or learned protective response.

Months of Age

A unit of time used to describe the age of a person, particularly infants and young children, in terms of months rather than years.

Contact Comfort

The psychological and physical comfort that an individual experiences from touching or being in close physical contact with others, especially significant in the context of infant-caregiver attachment.