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:

Human Capital

The abilities, expertise, and experiences held by a person or group, considered in relation to their worth for an organization.

Surplus

An excess of resources or assets beyond what is needed, often referring to budgetary or inventory contexts.

External Supply

The provision of goods or services from outside the organization, often through contracts or purchases from external sources.

Labour Markets

The supply and demand dynamics of labor, where employers seek to hire workers and workers seek employment.