Fender Corporation Makes a Cash Distribution of $40,000 to Gibson

question 89

Multiple Choice

Fender Corporation makes a cash distribution of $40,000 to Gibson in complete liquidation of the corporation. Gibson's basis in Fender stock is $18,000. What must Gibson report as income from the cash distribution?

• A)$- 0 -
• B)$18,000
• C)$22,000
• D)$40,000

---

Definitions:

Physical State

The condition of matter with respect to structure, form, phase, or other physical properties.

Psychological Need

An essential and inherent requirement of humans to achieve psychological well-being, including needs for autonomy, competence, and relatedness.

Functional Need

The basic or essential requirement that consumers seek to fulfill with a product or service, often related to its practical or utilitarian aspect.

High-Involvement

Pertains to purchase decisions that carry a higher risk and require more thought and information gathering by consumers due to their significance.