All of Sphere Corporation's Single Class of Stock Is Owned

question 64

Multiple Choice

All of Sphere Corporation's single class of stock is owned by four unrelated individuals in the following manner: Zack 27%, Xu 24.33%, Yvonne 24.33%, and Win 24.33%. Some of Zack's stock holdings are redeemed by Sphere Corporation, resulting in Zack's interest being reduced to 22.27%. Xu, Yvonne, and Win owned equally the remaining 77.73% of the Sphere stock. How should the redemption of Zack's stock be treated by Zack?

• A) sale transaction
• B) return of capital
• C) dividend income
• D) some other treatment

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Definitions:

Tolerance

The permissible limit of variation in a physical dimension or electrical component's performance, indicating the range within which the actual value is accepted to differ from the specified value.

Multiplier Band

The multiplier band is a component on a resistor that indicates the multiplication factor to be applied to the combined value of the first bands to determine the resistor's resistance value.

Silver

A chemical element with the symbol Ag and atomic number 47, known for its conductivity, malleability, and luster.

Color Code

A system where colors are used to represent numbers.