$1$

Pert $1$ of $3$

Required information

Problem $18-53($LO $18-4)($Algo$)$

$[$The following information applies to the questions displayed below.$]$

$5\mathrm{.}26$

points

Flintstone Company is owned equally by Fred and his sister Wilma, each of whom holds $2,800$ shares in the company. Wilma wants to reduce her ownership in the company, and it was decided that the company will redeem $595$ of her shares for $$27,100$ per share on December $31$ of this year. Wilma's tax basis in each share is $$9,700.$ Flintstone has current E&P of $$10,220,000$ and accumulated E&P at the beginning of the year is $$50,120,000.$

Problem $18-53$ Part a $($Algo$)$

o$.$ What are the amount and character $($capital gain or dividend$)$ recognized by Wilma because of the stock redemption, assuming only the "substantially disproportionate with respect to the shareholder" test is applied?

References

Dividend $$10,151,500$