At the Beginning of the Year, Clampett, Inc

question 124

Multiple Choice

At the beginning of the year, Clampett, Inc. had $100,000 in its AAA, $60,000 of earnings and profits from prior C corporation years. During the year, Clampett, Inc. earned $50,000 of ordinary income and paid $200,000 in distributions to its shareholders. Assume that J. D. owns 25% of Clampett, Inc., his basis in Clampett, Inc. at the beginning of the year is $10,000, and his share of the distribution was $50,000. How much, if any, of the distribution is taxable as a capital gain?

• A) $0.
• B) $15,000.
• C) $27,500.
• D) $40,000.
• E) None of these.

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Definitions:

Childhood Death

refers to the mortality of a child before reaching adulthood, with causes varying widely by geographic, socioeconomic, and health conditions.

Contrast Assumption

The assumption that objects have only one label.

Novel Terms

New or recently coined words or phrases that have emerged in a language or field of study.

Appearance-Reality Distinction

The cognitive ability to distinguish between how objects appear and their true nature, which develops in early childhood.