Question - Brenda, an NRA individual, owns 30% of the stock of Jeff, Inc., a US corporation. Jeff's balance sheet on the last day of the taxable year is as follows.
ADJUSTED BASIS FAIR MARKET VALUE
Cash (used as working capital) $200000 $200000
Investment in foreign land 300000 800000
Investment in US real estate:
Land 150000 400000
Buildings $2300000
Less: depreciation (300000) 2000000 5000000
$2650000 $6400000
Account payable 300000 $300000
Notes payable 500000 500000
Capital stock 400000 4150000
Retained earnings 1450000 1450000
$2650000 $6400000
Brenda was in the United States only 40 days in the tax year. She sold all of her stock in Jeff on the last day of the tax year for $6.4million. Brenda's adjusted basis in the stock sold was $500000. She sold the stock for cash. What are the US tax consequences, if any, to Brenda?