Rust Corporation Distributes Property to Its Sole Shareholder, Andre

question 167

Multiple Choice

Rust Corporation distributes property to its sole shareholder, Andre. The property has a fair market value of $350,000, an adjusted basis of $205,000, and is subject to a liability of $220,000. Current E & P is $500,000. With respect to the distribution, which of the following statements is correct?

• A) Rust has a gain of $15,000 and Andre has dividend income of $350,000.
• B) Rust has a gain of $145,000 and Andre's basis in the distributed property is $130,000.
• C) Rust has a gain of $130,000 and Andre's basis in the distributed property is $350,000.
• D) Rust has a gain of $145,000 and Andre has dividend income of $130,000.
• E) None of the above.

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Definitions:

Stereotyped Ways

Fixed, generalized beliefs and attitudes about specific groups, often based on oversimplified assumptions.

Violence

Physical force exerted for the purpose of causing damage or injury to people or property.

Simplified Ways

Simplified Ways imply approaches or methods that break down complex information or tasks into more understandable and manageable forms.

Chronically Accessible Schema

Mental structures that are frequently activated and easily brought to mind, influencing perceptions and behaviors in various contexts.