Problem
Loose Weapon, Inc. reports on the calendar year. On January 1, Murtaugh and Riggs each own 50%. In July, Murtaugh (who is too old for this) sold his stock to Dwayne Johnson for $140,000. At the beginning of the year, LW had accumulated E & P of $240,000 and generated current E & P for the year of $280,000 (prior to any distributions). LW distributed $300,000 on February 15 ($150,000 to Murtaugh and $150,000 to Riggs) and distributed another $300,000 on November 1 ($150,000 to Dwayne and $150,000 to Riggs). What is the dwayne's stock basis at year end.
a. $90,000.
b. $140,000.
c. $100,000.
d. $70,000.
e. None of the above.