Explore BrainMass

Explore BrainMass

    Dividend Income with Respect to Redemption

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    27. Five years ago, Eleanor transferred property she had used in her sole proprietorship to Blue Corporation for
    1,000 shares of Blue Corporation in a transaction that qualified under § 351. The assets had a tax basis to her of $400,000 and a fair market value of $550,000 on the date of the transfer. In the current year, Blue Corporation (E & P of $1 million) redeems 100 shares from Eleanor for $290,000 in a transaction that does not qualify for sale or exchange treatment. With respect to the redemption, Eleanor will have a:

    a. $250,000 dividend.
    b. $290,000 dividend.
    c. $250,000 capital gain.
    d. $290,000 capital gain.
    e. None of the above.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:19 pm ad1c9bdddf

    Solution Summary

    The dividend income with respect to redemption for Eleanor transfer property is given.