During 2015,Miles Nutt,the Sole Shareholder of a Calendar Year S

question 143

Multiple Choice

During 2015,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2014,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?

• A)Nutt recognizes a $1,000 LTCG.
• B)Nutt's stock basis will be $2,000.
• C)Nutt's ordinary income is $15,000.
• D)Nutt's tax-free return of capital is $11,000.
• E)None of the above.

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Definitions:

Stock Price

The current market price at which a share of a company's stock can be bought or sold.

Discount Rate

In finance, it is the interest rate used to determine the present value of future cash flows, or the rate at which a bank lends to other banks or financial institutions.

Series Discount

A set of multiple discounts applied one after the other on a product’s price.

Invoice Terms

Conditions specified on an invoice, including payment deadlines, cash discount opportunities, and penalties for late payment.