Kristine Owns All of the Stock of a C Corporation

question 158

Multiple Choice

Kristine owns all of the stock of a C corporation which owns the following assets:
* Potential § 1245 recapture of $45,000.
** Straight-line depreciation was used.
Her adjusted basis for her stock is $270,000. Calculate Kristine's recognized gain or loss and classify it as capital or ordinary if she sells her stock for $500,000.

• A)$230,000 ordinary income.
• B)$230,000 capital gain.
• C)$115,000 ordinary income and $115,000 capital gain.
• D)$110,000 ordinary income and $120,000 capital gain.
• E)None of the above.

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Definitions:

Industry Versus Inferiority

Erikson’s fourth stage in which children attempt new skills, developing feelings of competence in their success or feeling inferior or incompetent.

Healthy Sense

A level of awareness or perception that contributes to one's physical or mental well-being.

Independence

The state or quality of being self-sufficient and not reliant on external support or aid, often considered a key developmental milestone.

Morality

Principles concerning the distinction between right and wrong or good and bad behavior.