Keisha Owns 100% of DEF Company and Has a Basis

question 28

Multiple Choice

Keisha owns 100% of DEF Company and has a basis of $10,000 in its stock.DEF has earnings and profits of $9,000 and distributes a cash dividend to Keisha of $12,000.Keisha has a:

• A)Dividend of $12,000.
• B)Nontaxable distribution of $3,000.
• C)Capital gain of $2,000.
• D)Nontaxable distribution of $1,000.

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Definitions:

Arbitrary Inferences

A cognitive distortion that involves making a conclusion without supporting evidence or even despite contradictory evidence.

Automatic Thoughts

Immediate, involuntary thoughts that occur in response to a situation, often based on underlying beliefs.

Artifact Theory

A concept suggesting that observed differences in psychological testing across cultural or racial groups are the result of the tests themselves, not actual differences in the groups.

Rumination Theory

A theory suggesting that continually thinking about problems or negative thoughts without taking action can lead to or worsen depression.