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.

---

Definitions:

Anterior Pituitary

The anterior pituitary is a gland located at the base of the brain that produces hormones which regulate many bodily functions, including growth, reproduction, and metabolism.

Follicle Maturation

The process by which ovarian follicles mature and prepare for ovulation, under the influence of hormones.

FSH

Follicle-stimulating hormone, a gonadotropin released by the anterior pituitary gland which stimulates the growth of ovarian follicles in females and spermatogenesis in males.

GnRH

Gonadotropin-releasing hormone, a peptide hormone responsible for the release of follicle-stimulating hormone (FSH) and luteinizing hormone (LH) from the anterior pituitary.