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.