What are the amount and character recognized by Wilma

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Question - Flintstone Company is owned equally by Fred Stone and his sister Wilma, each of whom holds 3,300 shares in the company. Wilma wants to reduce her ownership in the company, and it was decided that the company will redeem 980 of her shares for $28,800 per share on December 31 of this year. Wilma's tax basis in each share is $5,500. Flintstone has current E&P of $9,400,000 and accumulated E&P at the beginning of the year is $50,000,000.

Required - What are the amount and character (capital gain or dividend) recognized by Wilma as a result of the stock redemption, assuming only the substantially disproportionate with respect to the shareholder test is applied?

Reference no: EM133152788

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