Pursuant to a Qualifying Stock Redemption, Redbird Corporation (E

question 91

Multiple Choice

Pursuant to a qualifying stock redemption, Redbird Corporation (E & P of $400,000) transfers land held for investment purposes to Bob, a 10% shareholder. On the date of the distribution, Redbird has a basis of $200,000 in the land and its fair market value is $150,000. Bob has a basis of $40,000 in the shares redeemed. With respect to the redemption:

• A) Bob will recognize a gain of $110,000.
• B) Bob will have $150,000 of dividend income.
• C) Bob will have a $200,000 basis in the land.
• D) Redbird Corporation will recognize a capital loss of $50,000.
• E) None of the above.