Julian, Berta, and Maria Own 400 Shares, 400 Shares, and 200

question 159

Multiple Choice

Julian, Berta, and Maria own 400 shares, 400 shares, and 200 shares, respectively, in Caramel Corporation (E & P of $750,000) . Berta is Julian's sister, and Maria is Julian's aunt. Caramel Corporation redeems all of Julian's stock for $420,000. Julian paid $200 a share for the stock five years ago. Julian continued to serve on Caramel's board of directors after the redemption. With respect to the redemption:

• A) Dividend income of $340,000.
• B) Dividend income of $420,000.
• C) Long-term capital gain of $340,000.
• D) Long-term capital gain of $420,000.
• E) None of the above.

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Bankruptcy

A legal process that allows individuals or businesses unable to meet their debt obligations to either restructure their debts or liquidate assets under court supervision.

Intellectual Property

Legal rights that protect creations of the mind, such as inventions, literary and artistic works, designs, and symbols.

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Cognitive abilities and techniques that enhance performance, problem-solving, and decision-making.

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