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

question 96

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

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Definitions:

Basic Factors

Fundamental elements or components that are essential and underlying in various systems, theories, or processes.

Predictable

The characteristic of an event or behavior that can be anticipated in advance based on known patterns or prior occurrences.

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Describes an adherence to laws and regulations, maintaining a sense of organization and structure in conduct.

Constructs

are mental models or concepts that individuals use to interpret and understand their experiences and the world around them.