Determine the amount of lois recognized gain

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Question - Beige, Inc., has 3,000 shares of stock authorized and 1,000 shares outstanding. The shares are owned by Sam (600 shares) and Lois (400 shares). Sam's adjusted basis for his stock is $60,000 and Lois' adjusted basis for her stock is $40,000. Beige's earnings and profits are $300,000. Beige redeems 200 of Lois' shares for $100,000. Determine the amount of Lois' recognized gain (1) if she is Sam's mother and (2) if they are unrelated.

a. $0 and $0.

b. $100,000 and $60,000.

c. $100,000 and $80,000.

d. $100,000 and $100,000.

e. None of the above.

Reference no: EM131787082

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