Brett Owns Stock in Oriole Corporation (Basis of $100,000) as an Investment

question 53

Multiple Choice

Brett owns stock in Oriole Corporation (basis of $100,000) as an investment. Oriole distributes property (fair market value of $375,000? basis of $187,500) to him during the year. Oriole has current E & P of $25,000 (which includes the E & P gain on the property distribution) , accumulated E & P of $100,000, and makes no other distributions during the year. What is Brett's capital gain on the distribution?

• A) $0
• B) $100,000
• C) $150,000
• D) $187,500
• E) None of the above

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Definitions:

Total Value

The summation of all assets or investments owned by an individual or entity, reflecting overall worth.

Risk-Free Portfolio

An investment portfolio consisting of assets that have no risk of financial loss, typically associated with government bonds.

Portfolio Beta

A measure of the volatility, or systematic risk, of a portfolio in comparison to the market as a whole, indicating how sensitive the portfolio is to market movements.

Security Market Line

A line that represents the relationship between the risk of an investment and its expected return, used in capital asset pricing model (CAPM) to determine risk-adjusted returns.