A Corporation Is Owned 70% by Jones and 30% by Smith.Jones

question 46

Multiple Choice

A corporation is owned 70% by Jones and 30% by Smith.Jones owns 70 shares with a cost of $100 each.Smith owns 30 shares with a cost of $100 per share.Smith and Jones are not related.The company redeems Smith's 30 shares at a redemption price of $400 per share.No stock is redeemed from Jones.This is not a redemption to pay death taxes,and it is not a partial liquidation.Smith will recognize

• A)dividend income of $12,000.
• B)dividend income of $9,000.
• C)capital gain of $12,000.
• D)capital gain of $9,000.

---

Definitions:

Average Variable Costs

The sum of all variable expenses divided by the total number of units produced.

Drone

An unmanned aerial vehicle (UAV) that can be remotely controlled or fly autonomously through software-controlled flight plans.

Average Fixed Costs

The total fixed costs of production divided by the quantity of output produced, indicating the average fixed expense per unit of output.

Drones

UAVs are aircraft systems that can be operated from a distance or navigate independently using flight plans programmed into their onboard software.