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13. At the beginning of the current year, Charles owns all of Pearl Corporations outstanding stock. His basis in the stock i

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Andy bought all of his stock from Donald for $200,000 on 1st September, Pearl distributed $ 100,000 cash to Andy. Since the Cost of Acquisition is accumulated of Cash Distribution,i.e.Dividend Income of Andy would be $ 100,000 ( distributed by Pearl Corporation on 1st September) and his basis in the Stock is $100,000. (Cash paid towards Acquisition $200,000 - Cash Distribution $100,000).

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