What will be the tax effect of the redemption to calvin

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Reference no: EM13863817

Calvin owns 40% of the outstanding shares of Copernicus Corp., which has accumulated earnings and profits of $100,000 as of December 31, Year 1. The outstanding shares not owned by Calvin are owned by parties unrelated to Calvin. On January 1 of Year 2, Calvin, wishing to pursue another business opportunity, sells his stock back to Copernicus Corp. Copernicus distributes cash of $250,000 in redemption of all of Calvin's stock. If Calvin's adjusted basis for the stock on the date of redemption is $125,000, what will be the tax effect of the redemption to Calvin?

Reference no: EM13863817

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