Hannah, Greta, and Winston Own the Stock in Redpoll Corporation

question 66

Multiple Choice

Hannah, Greta, and Winston own the stock in Redpoll Corporation (E & P of $900,000) as follows: Hannah, 600 shares? Greta, 400 shares? and Winston, 1,000 shares. Greta is Hannah's daughter, and Winston is Hannah's brother. Redpoll Corporation redeems 400 of Hannah's shares (basis of $55,000) for $240,000. Hannah purchased the stock three years ago as an investment. With respect to the stock redemption, Hannah has:

• A) Long-term capital gain of $185,000.
• B) Long-term capital gain of $240,000.
• C) Dividend income of $185,000.
• D) Dividend income of $240,000.
• E) None of the above.

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Definitions:

Laceration

A cut or tear.

Foreign Body

An object or substance present in a part of the body where it is not naturally found, often causing injury or infection.

Colles Fracture

A type of fracture of the distal radius in the forearm with dorsal (rear) displacement of the wrist and hand, often resulting from trying to stop a fall with outstretched hands.

Oblique Fracture

A type of bone fracture where the break is at an angle to the bone's long axis.