Question 8 Clark, Bruce, and Diana, unrelated individuals, own all of the stock
ID: 2448279 • Letter: Q
Question
Question 8
Clark, Bruce, and Diana, unrelated individuals, own all of the stock in Trinity Corporation (E & P of $1.2 million) as follows: Clark, 1,500 shares; Bruce, 300 shares; and Diana, 200 shares. Trinity redeems 900 of Clark’s shares (basis of $210,000) for $625,000. With respect to the distribution in redemption of the stock:
Clark has a capital gain of $415,000.
Clark has a capital gain of $625,000.
Clark has dividend income of $415,000.
Clark has dividend income of $625,000.
None of the above.
a.Clark has a capital gain of $415,000.
b.Clark has a capital gain of $625,000.
c.Clark has dividend income of $415,000.
d.Clark has dividend income of $625,000.
e.None of the above.
Explanation / Answer
Correct option is "A" -clark has a capital gain of $ 415,000
[Capital gain = 625000-210000 = 415000]
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