Fred is the sole shareholder of an S corporation in Fort Deposit,Alabama.At a time when his stock basis is $20,000,the corporation distributes appreciated property worth $100,000 (basis of $20,000).Fred's taxable gain is:

Question

Quizplus · Accepted Answer

When an S corporation distributes appreciated property to a shareholder, the shareholder's gain is equal to the property's fair market value minus the shareholder's stock basis. In this case, the appreciated property is worth $100,000 and Fred's stock basis is $20,000, so his taxable gain is $80,000. Therefore, the correct answer is C.

Fred Is the Sole Shareholder of an S Corporation in Fort