Assume That at the End of 2016, Clampett, Inc

Multiple Choice

Assume that at the end of 2016, Clampett, 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, Clampett, Inc. has no corporate E&P and J. D. has a basis of $50,000 in his Clampett, 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.