Corp. X has 400 common shares outstanding. A, B, C, & D all unrelated each own 100 shares. X redeems 55 shares from A; 25 from B; 20 from C. How is A taxed on the distribution? (1 – 3 words) _______________________________ Give specific Code Section. §__________ How is B taxed on the distribution (1 – 3 words) _______________________________ Give Code Section(s). §____________

Corp. X has 400 common shares outstanding. A, B, C, & D all unrelated each own 100 shares. X redeems 55 shares from A; 25 from B; 20 from C. How is A taxed on the distribution? (1 – 3 words) ___________ Give specific Code Section. § How is B taxed on the distribution (1 – 3 words) _ Give Code Section(s). §

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Corp. X has 400 common shares outstanding.
A, B, C, & D all unrelated each own 100 shares.
X redeems 55 shares from A; 25 from B; 20 from C.

How is A taxed on the distribution? (1 – 3 words) _______________________________
Give specific Code Section. §__________
How is B taxed on the distribution (1 – 3 words) _______________________________
Give Code Section(s). §____________

If D is A’s son how is A taxed? (1-3 words) _______________________________
Give Code Section(s). §__________

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