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Crown Corporation has a total of $400$ shares of stock outstanding. Crown Corp redeems $100$ shares from one of its shareholders $-$ Charles $-$ who owned $25\%$ of the Crown Corp stock. Charles and his $3$ brothers, Manny, Moe and Jack $-$ each owned $25\%$ of the stock. Yup, the $4$ brothers owned all of the stock! They formed the company $6$ years ago! Charles' basis in his $100$ shares was $$200,000.$ Crown pays Charles $$300,000$ on $12\mathrm{.}31$ of the current year to redeem his stock. Crown had Current Year E & P of $$400,000$; and an Accumulated DEFICIT in E&P of $$(200,000).$ Charles asks $-$ How do it treat this $$300,000$ I got?

Crown Corporation has a total of $400$ shares of stock outstanding. Crown Corp redeems $100$ shares from one of its shareholders $-$ Charles $-$ who owned $25\%$ of the Crown Corp stock. Charles and his $3$ brothers, Manny, Moe and Jack $-$ each owned $25\%$ of the stock. Yup, the $4$ brothers owned all of the stock! They formed the company $6$ years ago! Charles' basis in his $100$ shares was $$200,000.$ Crown pays Charles $$300,000$ on $12\mathrm{.}31$ of the current year to redeem his stock. Crown had Current Year E & P of $$400,000$; and an Accumulated DEFICIT in E&P of $$(200,000).$ Charles asks $-$ How do it treat this $$300,000$ I got?

Dividend of $$200,000$

Dividend of $$300,000$

Capital Gain of $$100,000$

Capital Gain of $$300,000$

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