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

question 15

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

---

Definitions:

Four Branches

Refers to the main divisions or areas of focus within a particular field or discipline, though the exact branches would depend on the context.

Natural Persons

Refers to human beings as individuals, endowed with rights and responsibilities under the law, distinguished from legal or artificial persons, such as corporations.

Reasonable Restrictions

Limitations that are considered fair or sensible, often applied in legal contexts to balance individual rights and societal interests.

Preemption

A doctrine under which certain federal laws preempt, or take precedence over, conflicting state or local laws.