PLEASE SHOW HOW YOU ARRIVE AT ANSWER, PLEASE:
Assume that at the end of 2012, Clampett, Inc. (an S corporation) distributes long term capital gain property (fair market value of $40,000, basis of $25,000) to each of its four equal shareholders (aggregate distribution of $160,000). At the time of the distribution, Clampett, Inc. has no corporate E&P and J.D. has a basis of $15,000 in his Clampett, Inc. stock. How much income does J.D. recognize as a result of the distribution?
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$0. |
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$15,000. |
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$25,000. |
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$40,000. |
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None of these. |