Rayburn Owns All the Shares of Newcastle Corporation That Operates $\quad$

question 33

Short Answer

Rayburn owns all the shares of Newcastle Corporation that operates as an S corporation.Rayburn's basis in the stock is $15,000.During the year he receives a cash distribution of $22,000 from Newcastle.What must Rayburn and Newcastle report as income from the cash distribution?
$\quad$ Rayburn $\quad$ Newcastle
a. $\$ - 0 - \quad \$ - 0 -$
b. $\$ 7,000 \quad \$ - 0$ -
c. $\$ - 0 - \quad \$ 7,000$
d. $\$ 7,000 \quad \$ 7,000$

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Definitions:

Competitive Market

A market structure characterized by a large number of sellers and buyers where no single entity has the power to influence market prices significantly.

Profits

The financial benefit that is realized when revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Profit-maximizing

A strategy where a firm sets its production level and pricing to achieve the highest possible profit.

Resource Combination

The process of organizing and combining different resources like capital, labor, and raw materials, to produce goods or services.