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Jen, the sole shareholder of Mahogany Corporation...

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Jen, the sole shareholder of Mahogany Corporation sold her stock to Jason on July 1 for $90,000. Jen's stock basis at the beginning of the year was $60,000. Mahogany made a $30,000 cash distribution to Jen immediately before the sale, while Jason received a $60,000 cash distribution from Mahogany on November 1. As of the beginning of the current year, Mahogany had $16,000 in accumulated E&P, while current E&P (before distribution) was $30,000. Which of the following statements is correct? a. Jen recognizes a $30,000 gain on the sale of the stock b. Jen recognizes a $34,000 gain on the sale of the stock c. Jen recognizes dividend income of $30,000 d. none of the above.

 

Paper#4876 | Written in 18-Jul-2015

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