What is Brett's capital gain on the distribution received from Oriole Corporation?

To determine Brett's capital gain on the distribution received from Oriole Corporation, it's important to evaluate how capital gains are calculated in the context of corporate distributions.

When a shareholder receives a distribution from a corporation, it is generally taxed based on the difference between the amount received and the shareholder's basis in the stock of that corporation. If the distribution exceeds the shareholder's basis, the excess amount is considered a capital gain.

Assuming Brett had a certain basis in his shares of Oriole Corporation, to arrive at the capital gain figure of $150,000, one must consider that Brett received a distribution totaling $150,000 above his initial investment (basis). This situation likely indicates that either the corporation profited significantly and distributed those profits or that Brett's investment had appreciated in value.

For instance, if Brett's basis in his shares was $0 (no initial investment) and he received a distribution of $150,000, the entire amount would represent a capital gain. If his basis were lower than $150,000 but greater than zero, the calculation would still yield a capital gain only for the portion of distribution exceeding his basis.

This understanding encompasses the application of capital gains taxes, contributing to why the figure of $150,000 accurately