Bev and Cabel Each Own One-Half of the Stock of Finch

question 26

Multiple Choice

Bev and Cabel each own one-half of the stock of Finch, Inc., an S corporation with no accumulated E & P. Bev's basis in the Finch stock is $225,000. Finch's taxable income for the current year is $100,000, and it distributes $180,000 to each shareholder. Bev's stock basis at the end of the year is:

• A)$0.
• B)$45,000.
• C)$95,000.
• D)$100,000.
• E)None of the above.

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Definitions:

Expectancy Theory

A motivational theory suggesting that individuals decide how to behave based on their expectations that the effort will lead to a certain outcome and the value of that outcome to them.

Research Follow-up

The process of collecting additional information or data after an initial investigation to clarify results or answer new questions.

Practical

Focused on or concerned with the actual doing or use of something rather than with theory and ideas.

Interpret

The act of explaining or providing the meaning of something, often requiring analysis of data, text, or artwork.