Glenda is the sole shareholder of Condor Corporation. She sold her stock to Melissa on October 31 for $150,000. Glenda's basis in Condor stock was $50,000 at the start of the year. Condor distributed land to Glenda immediately before the sale. Condor's basis in the land was $20,000 (fair market value of $25,000). On December 31, Melissa received a $75,000 cash distribution from Condor. During the year, Condor has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true?

Question

Quizplus · Accepted Answer

BGlenda's gain on the sale of her stock is calculated by subtracting her adjusted basis in the stock from the sale price. Her basis in the stock increases by the $20,000 basis of the land distributed to her, making her adjusted basis $70,000 ($50,000 original basis + $20,000 basis of land). The sale price is $150,000, so her gain is $150,000 - $70,000 = $80,000. However, none of the provided choices exactly match this calculation, indicating a potential misunderstanding or error in the question or choices. Given the options, B) seems to be a typo or mistake since it doesn't accurately reflect the correct calculation based on the provided information. However, without a correct match, the explanation provided aims to clarify the calculation process based on standard tax principles. The distribution Melissa receives is not directly related to Glenda's gain on the sale, and the specifics of Melissa's distribution and its tax implications depend on additional details not directly tied to the gain calculation for Glenda.

Glenda Is the Sole Shareholder of Condor Corporation