Caesar Owns 100% of Roman Company and His Basis in Its

question 95

Multiple Choice

Caesar owns 100% of Roman Company and his basis in its stock is $35,000.He receives cash of $10,000 and property with FMV of $30,000 and basis of $50,000 in complete liquidation of his ownership interest.As a result of this transaction,which of the following statements is incorrect?

• A)Caesar has a nontaxable return of capital of $35,000.
• B)Roman Company records a loss of $20,000.
• C)Caesar reports a capital gain of $5,000.
• D)Caesar reports dividend income of $40,000.

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