R Corporation, which has substantial E&P, redeems 50 of Ts 70 shares (basis of $100...
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Accounting
R Corporation, which has substantial E&P, redeems 50 of Ts 70 shares (basis of $100 per share) for $60,000. What effect does the redemption have on Ts taxable income and the basis for his stock, assuming the transaction qualifies as a sale?
a. T recognizes $55,000 capital gain and his basis in remaining stock is $2,000
b. T recognizes $60,000 capital gain and his basis in remaining stock is $2,000
c. T recognizes $60,000 dividend and his basis in remaining stock is $7,000
c. T recognizes $60,000 dividend and his basis in remaining stock is $2,000
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