Kingbird redeems 200 of amatas shares for 1000 per share., Ask an Expert

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Kingbird Corporation ( E & P of $800,000) has 1,000 shares of stock outstanding. That stock is held by Amata (550 shares) and Esteban (450 shares), who are unrelated individuals. Kingbird redeems 200 of Amata's shares for $1000 per share. Amata paid $300 per share for her stock nine years ago. Which of the following statements is correct with respect to the stock redemption?

A. Amata has dividend income of $200,000

B. Amata has a long-term capital gain of $140,000

C. Amata's basis in her remaining 350 shares is $60,000

D. Kingbird reduces its E & P by $200,000

E. None

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9435643

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