# Sayid is the sole shareholder of an S corporation in Hattiesburg, Mississippi. At a time when his stock basis is \$20,000, the corporation distributes appreciated property worth \$40,000 (basis of \$20,000). There is no built-in gain. Sayid's taxable gain is:

\$20,000

Explanation:

The computation of the taxable gain is shown below:

The corporate gain is

= \$40,000 - \$20,000

= \$20,000

Now the stock basis is increased i.e.

= \$20,000 + \$20,000

= \$40.000

Now the stock basis decreased to zero i.e.

= \$40,000 - \$40,000

= \$0

So, here the taxable gain is of \$20,000

## Related Questions

In April 2013, Sparkle Enterprises purchased the Crimson Mine at a cost of \$18,000,000. The mine is estimated to contain 500,000 tons of ore with a residual value of \$2,000,000 after mining operations are completed. During 2013, 120,000 tons of ore were removed from the mine and sold. In this situation: a. The book value of the mine is \$16,000,000 at the end of 2013.
b. The amount of depletion deducted from revenue during 2013 is \$3,840,000.
c. The amount of depletion deducted from revenue during 2013 is \$2,000,000.
d. The mine is classified as an intangible asset with in indefinite life and is not amortized.

Explanation:

Giving the following information:

In April 2013, Sparkle Enterprises purchased the Crimson Mine for \$18,000,000. The mine is estimated to contain 500,000 tons of ore with a residual value of \$2,000,000 after mining operations are completed. During 2013, 120,000 tons of ore were removed from the mine and sold.

Annual depreciation= [(original cost - salvage value)/useful life of production in units]*units produced

Annual depreciation= (16,000,000/500,000)*120,000= \$3,840,000

If the percentage change in the quantity demanded of a good is greater than the percentage change in the price of the good, then how is the demand for the good characterized?

Price Elastic

Explanation:

We know that

The formula to compute the price elasticity of demand is shown below:

= (Percentage change in quantity demanded) ÷ (percentage change in price)

The classification as follows

1. Perfectly inelastic = If zero

2. Inelastic = When elasticity is below than one

3. Unitary elastic = When elasticity is equal to one

4. Elastic = When elasticity is exceeded than one

5. Perfectly elastic = When elasticity is in infinity

Since the  percentage change in the quantity demanded of a good is greater than the percentage change in the price of the good which reflects that the elasticity is more than one

The demand is price elastic in nature because it is greater than 1.

Explanation:

Price Elasticity of demand refers to the response of quantity demanded of a good to the change in price. Of course, when the price decreases, quantity demanded of a good increases and vice-versa but to how much degree is determined by the Price Elasticity of demand.

Mathematically, Price Elasticity of Demand is the ratio of % change in quantity demanded of a good and % change in the price of a good i.e.

Price Elasticity of Demand = % change in quantity demanded of a good / % change in the price of a good

In the problem, since the percentage change in the quantity demanded of a good is greater than the percentage change in the price of the good, the above ratio will be greater than 1. Hence, the demand of the good is price elastic.

A salesperson is trying to decide which element of the sales presentation mix to emphasize in a particular presentation. She wants to make sure her communication will resonate with the prospect. What term describes the process this salesperson is going through?

A salesperson is trying to decide which element of the sales presentation mix to emphasize in a particular presentation. She wants to make sure her communication will resonate with the prospect. The process through which the salesperson is going through is Persuasive communication process

Explanation:

Persuasive communication process is one in which the salesperson will try to influence the beliefs and actions of others.She will try to convince employees  to work together in the direction that will help in achieving the goals of the company.

Persuade means to convince others.A persuasive communication focuses on the needs and desires of target audiences. The response of audience become more positive if they feel that communication is fulfilling their needs.if  we deliver a message which audience are looking forward to then they will receive that message easily otherwise they will ignore it.

Our message or the information we are delivering must be supported by statistics and examples. Also We must try to tell them about the benefits associated with the information given.Suppose we want to persuade others about a particular policy than we should tell them regarding benefits associated with that policy and it must be supported with examples.

This will make our communication more persuasive.

A number of activities that are a part of a company's quality control system are listed below: a. Product testing.
b. Product recalls.
d. Quality circles.
e. Downtime caused by defects.
f. Cost of field servicing.
g. Inspection of goods.
h. Quality engineering.
i. Warranty repairs.
j. Statistical process control.
k. Net cost of scrap.
I. Depreciation of test equipment.
m. Returns and allowances arising from poor quality.
n. Disposal of defective products.
o. Technical support to suppliers.
p. Systems development.
q. Warranty replacements.
r. Field testing at customer site.
s. Product design.

Required:
1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost.
2. Which of the four types of costs in (1) above are incurred in an effort to keep poor quality of conformance from occurring? Which of the four types or costs in (1) above are incurred because poor quality of conformance has occurred?

Explanation:

A. Product testing - Appraisal cost

B. Product recalls - External Failure cost

C. Rework labor and overhead - Internal Failure cost

D. Quality circles - Prevention cost

E. Downtime caused by defects - Internal Failure cost

F. Cost of field servicing - External Failure cost

G. Inspection of goods - Appraisal cost

H. Quality engineering -  Prevention cost

I. Warranty repairs - External Failure cost

J. Statistical process control -Prevention cost

K. Net cost of scrap - Internal Failure cost

L. Depreciation of test equipment - Appraisal cost

M. Returns and allowances arising from poor quality - External Failure cost

N. Disposal of defective products - Internal Failure cost

O. Technical support to suppliers - Prevention cost

P. Systems development - Prevention cost

Q. Warranty replacements -   Internal Failure cost

R. Field testing at customer site - Appraisal cost

S. Product design -  Prevention cost

2. Which of the four types of costs in (1) above are incurred in an effort to keep poor quality of conformance from occurring? Prevention costs and appraisal costs.

Which of the four types or costs in (1) above are incurred because poor quality of conformance has occurred?   Internal failure costs and external failure costs

The costs associated with each activity can be classified into prevention cost, appraisal cost, internal failure cost, or external failure cost. Prevention costs are incurred to keep poor quality of conformance from occurring, while internal failure costs occur because poor quality of conformance has occurred within the organization.

### Explanation:

The costs associated with each activity can be classified as follows:

1. Prevention cost: Product design, Quality circles, Quality engineering, Statistical process control, Systems development
2. Appraisal cost: Inspection of goods, Depreciation of test equipment
3. Internal failure cost: Rework labor and overhead, Downtime caused by defects, Cost of field servicing, Net cost of scrap, Depreciation of test equipment, Returns and allowances arising from poor quality, Disposal of defective products, Technical support to suppliers, Systems development
4. External failure cost: Product recalls, Warranty repairs, Warranty replacements, Field testing at customer site

Prevention costs are incurred to keep poor quality of conformance from occurring, while appraisal costs are incurred to assess the conformance of products. Internal failure costs occur because poor quality of conformance has occurred within the organization, while external failure costs occur because poor quality of conformance has occurred outside of the organization.

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9. Suppose an investor has two choices:Choice 1: invest in a Bond A which is a 2-year bond with an interest rate of 12% Choice B: two 1-year bonds with sequential interest payment of 10% and 14%?Which Choice would produce a greater return if the pure expectations theory was to hold true. *A) Choice A
B) Choice B
C) Both of the choices would produce the same return
D) We can’t tell.

the answer is (C) both of the choices would produce the same return

1. How is inflation measured? Fill in the blanks to complete the passage about the CPI and the GDP deflator. The Consumer Price Index (CPI) and the GDP deflator are both price indices, so they both serve as measures of inflation. However, the CPI uses a smaller basket of goods. The GDP deflator aims to take into account all final goods and services, whereas the CPI only includes goods and services sold to –. So, for instance, prices on farm equipment are included in the – but not in the –.

First blank: Consumers

Second blank: GDP

Third blank: CPI

Explanation:

The Consumer Price Index is used to measure the basic basket of services and goods that a normal person often buys in order to have a decent quality of life, the GDP includes all goods and services produced, for example all the office equipment, or farm equipment that was produced by a countries economy, the average customer doesn´t need farm equipment nor office equipment that is why it is not taken into account in the Costumer Price Index.

Inflation is measured using the Consumer Price Index (CPI) and the GDP deflator. The CPI measures price changes for a specific basket of goods and services bought by the typical consumer, while the GDP deflator considers all domestically produced final goods and services.

### Explanation:

Inflation is typically measured using two indices known as the Consumer Price Index (CPI) and the GDP deflator. The CPI measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Not all goods and services are included in the CPI, it primarily focuses on those sold to typical urban consumers.

On the other hand, the GDP deflator is a measure of the price of all domestically produced final goods and services in an economy including items like farm equipment, which are not included in the CPI. The GDP deflator takes a broader approach and doesn't restrict itself to a fixed basket of goods and services, rather reflects the current composition of output and the prices of all the goods and services currently produced domestically.

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