Jack Corporation Redeems 200 Shares of Its Stock for $100,000

question 92

Multiple Choice

Jack Corporation redeems 200 shares of its stock for $100,000 from Junior, who inherited the stock from his father, Ken. The stock's FMV on Ken's date of death was $90,000. Ken's basis in the stock was $40,000. Jack Corporation had an E&P balance of $300,000. If the redemption qualifies under Sec. 303, Junior will

• A)recognize a capital gain of $10,000.
• B)recognize a capital gain of $60,000.
• C)recognize $100,000 in dividend income.
• D)recognize dividend income of $50,000 and a capital gain of $10,000.

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Definitions:

Management Style

The way a manager works with and oversees employees to achieve organizational goals.

Describing Practice

The act of explaining or detailing the methods and procedures within a particular area or profession.

First-Line Manager

A manager who is directly responsible for overseeing and supervising the daily activities of non-managerial employees.

Facing Upward

Refers to an attitude or strategy of focusing on higher goals, optimism, or progress.