EFG Inc. is a calendar year corporation. EFG had current earnings and profits of $100,000 and no

Question:

EFG Inc. is a calendar year corporation. EFG had current earnings and profits of $100,000 and no accumulated earnings and profits when it distributed a total of $160,000 to its two equal shareholders, Jane and Joe. On the date of the cash Jane’s basis in her EFG Inc. stock was $10,000 and Joe’s basis in his EFG Inc. stock was $35,000.
How much is includible by Jane in her gross income for the current taxable year with respect to the to her?
A. $50,000 income and 0 capital gain.
B. $80,000 income and 0 capital gain.
C. 0 income and $70,000 capital gain.
D. $50,000 income and $20,000 capital gain.

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