Assume That at the End of 2020, Clampett, Incorporated (An

Multiple Choice

Assume that at the end of 2020, Clampett, Incorporated (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, Clampett, Incorporated, has no corporate earnings and profits and J.D. has a basis of $50,000 in his Clampett, Incorporated, 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 the choices are correct.