Question

15- Clampett, Inc., has been an S corporation since its inception. On July 15, 2020, Clampett,...

15-

Clampett, Inc., has been an S corporation since its inception. On July 15, 2020, Clampett, Inc., distributed $45,500 to J.D. His basis in his Clampett, Inc., stock on January 1, 2020, was $37,500. For 2020, J.D. was allocated $11,500 of ordinary income from Clampett, Inc., and no separately stated items. How much capital gain does J.D. recognize related to Clampett, Inc., in 2020?

Multiple Choice

  • $23,000.

  • $11,500.

  • None of the choices are correct.

  • $57,000.

  • $45,500.

Business   Accounting   
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Answer #1

ANSWER=

OPTION-(3) IS THE CORRECT ANSWER I.E. NONE OF THE CHOICES ARE CORRECT.[$0]

Explanation:-

J.D.'s Total Capital Gain from clampett inc. are as follows:-

Capital gain from distribution in excess of basis(if any)

Distribution Portion:- $45500

Less:- J.D's basis in Clampett :- $37500

Less:- Ordinary income from allocation of distributive share:- $11500

Capital Gain (Note Below) = $0

**Since, there is no  distribution excess from basis therefore there is no capital gain arises on it. thus,No taxable income no capital gain i.e. NIL

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