Rust Corporation Distributes Property to Its Sole Shareholder, Andre

question 167

Multiple Choice

Rust Corporation distributes property to its sole shareholder, Andre. The property has a fair market value of $350,000, an adjusted basis of $205,000, and is subject to a liability of $220,000. Current E & P is $500,000. With respect to the distribution, which of the following statements is correct?

• A) Rust has a gain of $15,000 and Andre has dividend income of $350,000.
• B) Rust has a gain of $145,000 and Andre's basis in the distributed property is $130,000.
• C) Rust has a gain of $130,000 and Andre's basis in the distributed property is $350,000.
• D) Rust has a gain of $145,000 and Andre has dividend income of $130,000.
• E) None of the above.

Recognize how changes in productivity and the cost of production factors affect firm decisions.

Analyze the impact of management training on firm productivity.

Understand the production decisions based on marginal revenue product and product price.

Comprehend the adjustments firms make in hiring based on shifts in labor supply.

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Definitions:

Product Cost

The total amount of expenses incurred to create a product, including materials, labor, and overhead.

Simplified Technology

Technology that has been designed to be easier to use or understand, with fewer complexities or advanced features.

Launching

The process of introducing a new product or service to the market.

Probabilities

A measure or quantification of the likelihood that an event will occur, ranging between 0 (impossible) and 1 (certain).