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.

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New York

A state in the Northeastern United States, known for its cultural, financial, and media impact worldwide, with its largest city, New York City, often described as the financial capital of the world.

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