When Gail Dies,she Owns 100% of the Stock of an S

question 66

Multiple Choice

When Gail dies,she owns 100% of the stock of an S corporation,with an adjusted basis of $10,000 and FMV of $100,000.The adjusted basis and FMV of the assets inside the S corporation are the same amounts as for Gail's stock.Gail's son Phil inherits all of the stock,but does not wish to continue the business.Therefore,the S corporation sells the assets,resulting in a $90,000 capital gain,and liquidates.Assuming that Phil is subject to a marginal tax rate of 30%,what taxes are due?

• A)$0.
• B)$25,000.
• C)$27,000.
• D)$30,000.
• E)None of the above.

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Definitions:

Normally Distributed

Describes a distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Test Statistic

A standardized value derived from sample data during a hypothesis test which is used to determine whether to reject the null hypothesis.

Lower Tailed Test

A statistical test used to determine if a dataset's lower end values significantly differ from the hypothesized value.

Test Statistic

A standardized value calculated from sample data during a hypothesis test that is used to make a decision about the null hypothesis.