Comet Company is owned equally by Pat and his sister Pam, each of whom hold 100 shares in the company. Pam wants to reduce her ownership in the company, and it was decided that the company will redeem 50 of her shares for $1,000 per share on December 31, 20X3. Pam's income tax basis in each share is $500. Comet has total E&P of $250,000. What are the tax consequences to Pam because of the stock redemption?
A. $50,000 dividend and a tax basis in each of her remaining shares of $100.
B. $50,000 dividend and a tax basis in each of her remaining shares of $50.
C. $25,000 capital gain and a tax basis in each of her remaining shares of $100.
D. $25,000 capital gain and a tax basis in each of her remaining shares of $500.
Answer: D
You might also like to view...
_____ makes spatial differentiation even more of a reality for organizations.
A. Routineness B. Globalization C. Decentralization D. Downsizing
Which of the following is an example of an input control test?
a. sequence check b. zero value check c. spooling check d. range check
Words that modify or describe adjectives, verbs, or adverbs are called:
A. adjectives. B. adverbs. C. verbs. D. appositives.
According to your textbook, people are more likely to engage in political behavior in organizations
a. Where resources such as monetary rewards or promotions are limited b. Where profits are soaring c. Where ethical protocols are lacking d. When debts are rising