Assume That at the End of 2016, Clampett, Inc

question 3

Multiple Choice

Assume that at the end of 2016, Clampett, Inc. (an S corporation) distributes property (fair market value of $40,000, basis of $5,000) to each of its four equal shareholders (aggregate distribution of $160,000) . At the time of the distribution, Clampett, Inc. has no corporate E&P and J. D. has a basis of $50,000 in his Clampett, Inc. stock. How much income does J. D. recognize as a result of the distribution?

• A) $0.
• B) $5,000.
• C) $35,000.
• D) $40,000.
• E) None of these.

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Definitions:

Extreme Anxiety

A heightened state of fear, worry, or nervousness that is significantly more intense than the typical responses to stress.

External Stimuli

Any information or changes in the environment outside the organism that lead to a response.

Ego Integrity

A sense of completeness and cohesion of the self, often achieved in late adulthood, reflecting on one's life as meaningful and fulfilling.

Despair

A profound feeling of hopelessness or loss, often occurring during Erikson's final stage of psychosocial development in late adulthood.