Viking Corporation Is Owned Equally by Sven and His Wife

question 42

Multiple Choice

Viking Corporation is owned equally by Sven and his wife, Olga, each of whom holds 125 shares in the company. Viking redeemed 80 shares of Sven's stock for $1,700 per share on December 31, 20X3. Viking has total E&P of $470,000. What are the tax consequences to Viking because of the stock redemption?

• A) No reduction in E&P because of the exchange.
• B) A reduction of $136,000 in E&P because of the exchange.
• C) A reduction of $150,400 in E&P because of the exchange.
• D) A reduction of $300,800 in E&P because of the exchange.

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