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Question:12 ABC, Inc. has been an S corporation since its inception. On July 15, 2016, ABC, Inc. distributed $50,000 to J. D. His basis in his ABC, Inc. stock on January 1, 2016, was $45,000. For 2016, J. D. was allocated $10,000 of ordinary income from ABC, Inc. and no separately stated items. How much capital gain does J. D. recognize related to ABC, Inc. in 2016? a. $60,000. b. $50,000. c. $20,000. d. $10,000. e. None of these.

Question:12 ABC, Inc. has been an S corporation since its inception. On July 15, 2016, ABC, Inc. distributed $50,000 to J. D. His basis in his ABC, Inc. stock on January 1, 2016, was $45,000. For 2016, J. D. was allocated $10,000 of ordinary income from ABC, Inc. and no separately stated items. How much capital gain does J. D. recognize related to ABC, Inc. in 2016? a. $60,000. b. $50,000. c. $20,000. d. $10,000. e. None of these.

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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Question:12 ABC, Inc. has been an S corporation since its inception. On July 15, 2016, ABC, Inc. distributed $50,000 to J. D. His basis in his ABC, Inc. stock on January 1, 2016, was $45,000. For 2016, J. D. was allocated $10,000 of ordinary income from ABC, Inc. and no separately stated items. How much capital gain does J. D. recognize related to ABC, Inc. in 2016? a. $60,000. b. $50,000. c. $20,000. d. $10,000. e. None of these.
Transcribed Image Text:Question:12 ABC, Inc. has been an S corporation since its inception. On July 15, 2016, ABC, Inc. distributed $50,000 to J. D. His basis in his ABC, Inc. stock on January 1, 2016, was $45,000. For 2016, J. D. was allocated $10,000 of ordinary income from ABC, Inc. and no separately stated items. How much capital gain does J. D. recognize related to ABC, Inc. in 2016? a. $60,000. b. $50,000. c. $20,000. d. $10,000. e. None of these.
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