Hazel, Emily, and Frank, Unrelated Individuals, Own All of the Stock

question 21

Multiple Choice

Hazel, Emily, and Frank, unrelated individuals, own all of the stock in Wren Corporation (E & P of $1.2 million) as follows: Hazel, 1,300 shares; Emily, 400 shares; and Frank, 300 shares.Wren redeems 300 of Hazel's shares (basis of $60,000) for $450,000.With respect to the distribution in redemption of the stock:

• A)Hazel has a capital gain of $390,000.
• B)Hazel has dividend income of $450,000.
• C)Hazel has dividend income of $390,000.
• D)Hazel has a capital gain of $450,000.
• E)None of the above.

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Definitions:

Hand-Made Purses

Purses or bags that are crafted manually without the use of automated machinery.

Physical Factors

Elements of the physical environment that can affect businesses and individuals, such as geography, climate, and natural resources.

Local Labor Costs

The expenses associated with employing labor in a specific geographic location, including wages, benefits, and taxes.

Analytic Production

A methodological approach in manufacturing focusing on using data analytics to optimize production processes, increase efficiency, and reduce costs.