In the current year, Boone inherited 100% of Cane Corporation's outstanding stock from his mother. The stock had a fair market value of $500,000 at the date of death and was reflected on Cane's balance sheet as follows: Cash $500,000 Capital stock 300,000 Accumulated earnings & profits 200,000 Boone immediately withdrew $100,000 out of Cane Corporation as a dividend distribution. Later in the year, pursuant to a plan of liquidation, Boone withdrew the remaining $400,000 out of Cane. For the current year, how much will Boone be required to report as ordinary dividend income and capital gain or loss?Ordinary Dividend Capital Gain or Loss A. $200,000 $200,000 B. $0 $0 C. $100,000 $100,000 D. $100,000 $500,000
In the current year, Boone inherited 100% of Cane Corporation's outstanding stock from his mother. The stock had a fair market value of $500,000 at the date of death and was reflected on Cane's balance sheet as follows: Cash $500,000 Capital stock 300,000 Accumulated earnings & profits 200,000 Boone immediately withdrew $100,000 out of Cane Corporation as a dividend distribution. Later in the year, pursuant to a plan of liquidation, Boone withdrew the remaining $400,000 out of Cane. For the current year, how much will Boone be required to report as ordinary dividend income and capital gain or loss?Ordinary Dividend Capital Gain or Loss A. $200,000 $200,000 B. $0 $0 C. $100,000 $100,000 D. $100,000 $500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In the current year, Boone inherited 100% of Cane Corporation's outstanding stock from his mother. The stock had a fair market value of $500,000 at the date of death and was reflected on Cane's balance sheet as follows:
Cash
$500,000
Capital stock
300,000
200,000
- Boone immediately withdrew $100,000 out of Cane Corporation as a dividend distribution. Later in the year, pursuant to a plan of liquidation, Boone withdrew the remaining $400,000 out of Cane. For the current year, how much will Boone be required to report as ordinary dividend income and
capital gain or loss?Ordinary Dividend - Capital Gain or Loss
- A.
- $200,000
- $200,000
- B.
- $0
- $0
- C.
- $100,000
- $100,000
- D.
- $100,000
- $500,000
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