F Corporation Has 100 Shares of Outstanding Stock, All Owned

question 8

Multiple Choice

F Corporation has 100 shares of outstanding stock, all owned by J.J bought the shares 10 years ago for $20,000, or $200 per share.During the year, the corporation redeemed 10 shares of J's stock for $30,000.Which of the following is true?

• A)J must report a capital gain of $28,000.
• B)J must report a capital gain of $10,000.
• C)J must report dividend income of $28,000.
• D)J must report dividend income of $30,000.

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Definitions:

Farming

The practice of cultivating the land and raising livestock to produce food and other agricultural products.

Gold

A yellow precious metal used for coinage, jewelry, and other arts, also valued as a financial investment.

Feme Sole

A legal term from English law referring to a single woman, including those who were widowed or divorced, who had legal rights to own property and conduct business in her own name.