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John owns 100% of the stock of Zook, Inc., with an adjusted basis of $70,000. He receives a cash distribution of $195,000 from Zook when

John owns 100% of the stock of Zook, Inc., with an adjusted basis of $70,000. He receives a cash distribution of $195,000 from Zook when its earnings and profits are $85,000.

a. What is John's dividend income?

b. What is John's recognized gain or loss?

c. What is John's adjusted basis for her stock after the distribution?

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