Roger Owns 40% of the Stock of Gold, Inc

question 114

True/False

Roger owns 40% of the stock of Gold, Inc. (adjusted basis of $800,000). Silver redeems 60% of Roger's shares for $900,000. If the stock redemption qualifies for return of capital treatment, Roger's recognized gain is $100,000.

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Definitions:

Employee Retirement Income Security Act

A federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

Pension Plans

Financial arrangements that provide retirees with income during retirement, typically funded by employers or the government.

Private Industry

The segment of the economy that is operated by individuals or corporations for profit and is not directly controlled by the government.

Family and Medical Leave Act

A US federal law requiring covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons.