Glenda is the sole shareholder of Condor Corporation. She sold her stock to Melissa on October 31
Question:
Glenda is the sole shareholder of Condor Corporation. She sold her stock to Melissa on October 31 for $150,000. Glenda’s basis in Condor stock was $50,000 at the start of the year. Condor distributed land to Glenda immediately before the sale. Condor’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Melissa received a $75,000 cash distribution from Condor. During the year, Condor has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true?
Glenda recognizes a $110,000 gain on the sale of her stock. (Why is this correct?)
Glenda recognizes a $100,000 gain on the sale of her stock.
Melissa receives $5,000 of dividend income.
Glenda receives $20,000 of dividend income.
None of the above.
Business Law Text and Cases
ISBN: 978-1337374491
14th edition
Authors: Kenneth W. Clarkson, Roger Miller, Frank B. Cross