Five Years Ago,Eleanor Transferred Property She Had Used in Her

question 98

Multiple Choice

Five years ago,Eleanor transferred property she had used in her sole proprietorship to Blue Corporation for 1,000 shares of Blue Corporation in a transaction that qualified under § 351.The assets had a tax basis to her of $300,000 and a fair market value of $450,000 on the date of the transfer.In the current year,Blue Corporation (E & P of $600,000) redeems 200 shares from Eleanor for $190,000 in a transaction that qualifies for sale or exchange treatment.With respect to the redemption,Eleanor will have a:

• A)$130,000 dividend.
• B)$190,000 dividend.
• C)$130,000 capital gain.
• D)$190,000 capital gain.
• E)None of the above.

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Definitions:

John Wesley Powell

An American explorer, geologist, and ethnologist, known for his pioneering expeditions down the Green and Colorado Rivers and his advocacy for conservation and responsible development of the American West.

Interstate Commerce Commission

A regulatory agency in the United States created to oversee the railroads and later expanded to other modes of transportation, aiming to ensure fair rates and practices.

Historical Significance

Describes the importance or impact that an event, person, or place has had on history.