Shares of stock and stock redemption

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Reference no: EM13143757

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 $1,000 per share. Amata paid $300 per share for her Kingbird 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 of the above.

Reference no: EM13143757

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