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How much gain does Prune recognize as a result of this transaction?

How much gain does Prune recognize as a result of this transaction?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dried Fruit Corp. has had a valid S Corp election in effect at all times since its incorporation. The Dried Fruit Corp. stock is owned one-third by Raisin and two-thirds by Prune. All shareholders are US resident citizen individuals. At the beginning of the current year, Raisin's basis in his shares was $36,000 and Prune's basis in her shares was $12,000. During the current year, Dried Fruit Corp. earned $216,000 of net income from operations. Raisin's share was $72,000; Prune's share was $144,000. On July 1st, Dried Fruit Corp. distributed $96,000 to Raisin and $192,000 to Prune. How much gain does Prune recognize as a result of this transaction? Ⓒ $24,000 O $12,000 O $0 O $36,000
Transcribed Image Text:Dried Fruit Corp. has had a valid S Corp election in effect at all times since its incorporation. The Dried Fruit Corp. stock is owned one-third by Raisin and two-thirds by Prune. All shareholders are US resident citizen individuals. At the beginning of the current year, Raisin's basis in his shares was $36,000 and Prune's basis in her shares was $12,000. During the current year, Dried Fruit Corp. earned $216,000 of net income from operations. Raisin's share was $72,000; Prune's share was $144,000. On July 1st, Dried Fruit Corp. distributed $96,000 to Raisin and $192,000 to Prune. How much gain does Prune recognize as a result of this transaction? Ⓒ $24,000 O $12,000 O $0 O $36,000
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