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What would be the reduction in the earnings and profits

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Question - Dionne Corporation has one hundred shares of stock outstanding. It redeems forty shares of stock for $200,000 at a time when its earning and profits are $200,000. What would be the reduction in the earnings and profits of Dionee Corporation as a result of this redemption? Assume that the redemption qualifies as a stock redemption under section 302(b)

a. $200,000

b. $20,000

c. $80,000

d. $100,000

Reference no: EM133031107

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