3 Finch Corporation (E& Pof $600,000) distributed machinery ($20,000 adjusted basis. 170,000 Fair market value) to its sole shareholder Kathleen The property is subject to a 60.000 mortgage, which Kathleen assumed. How much dividend income does Kathleen recognize as a result of the distribution and what is het basis in the machinery Dividend 170000-60000, Basis 170000 4Hannah, Greta, and Winston own the stock in Redpoll Corporation (E & P of $900,000) as follows: Hannah, 600 shares; Greta, 400 shares; and Winston, 1,000 shares. Greta is Hannah's daughter, and Winston is Hannah's brother. Redpoll Corporation redeems 500 of Hannah's shares (basis of $55.000) for $250,000. Hannah purchased the stock three years ago as an investment. With respect to the stock redemption, Hannah has: Before Redemtion 1000 After Redemtion 500 Hanha Other 1000 1000 33.33% Ownership 50% Note Hanh gets 400 shares from her daughter 50% test 80% of 50% -40% 33.33% is less than 40% test 1 is met Test 2 is met she owns less than 50% Redemption qualify for sale or exchange Capital Gain =250000-55000