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QUESTION
Assume that at the end of 2015, ABC, Inc.
Assume that at the end of 2015, ABC, Inc. (an S Corporation) distributes property (fair market value of $40,000, basis of $5,000) to each of its four equal shareholders (aggregate distribution of $160,000). At the time of the distribution, ABC, Inc. has no corporate E&P and J. D. has a basis of $50,000 in his ABC, Inc. stock. What is J. D.'s stock basis after the distribution?
A. $45,000.
B. $50,000.
C. $85,000.
D. $90,000.
E. None of these.
