Viking Corporation is owned equally by Sven and his wife Olga, each of whom hold
ID: 2515111 • Letter: V
Question
Viking Corporation is owned equally by Sven and his wife Olga, each of whom hold 14 share on December 31, 20x3. Viking has total E&P; of $560,000 What are the tax consequences to Viking because of the stock redemption? O shares in the company Viking redeemed 70 shares of Sven's stock for $1700 per Multiple Choice No reduction in E&P; because of the exchange A reduction of $119,000 in E&P; because of the exchange A reduction of $140,000 in E&P; because of the exchange A reduction of $280,000 in E&P; because of the exchange Pre 8 of 52 Next>Explanation / Answer
Solution for Question-1:-
b. A reduction of $119000 in E&P beacuse of the exchange
Explanation : The redemption will be treated as dividend So, Viking reduces it E&P by the amount distributed. Hence a reduction of ( 70 Share*$1700/Share) i.e. $119000 in E&P will be made.
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