Question
Bobcat corp redeems all of zeds 4000 shares and distributes to him 2000 shares of van corps stock plus $ 50,000 cash. zeds basis in
Bobcat corp redeems all of zeds 4000 shares and distributes to him 2000 shares of van corps stock plus $ 50,000 cash. zeds basis in his 20% interest in bobcat is $100,000 and the stocks value is $ 250,000 at the time bobcat is acquired by van the accumulated earnings and profits of bobcat is $ 200,000 and of van are $ 75,000 . How does Zed treat this transaction for tax purposes
a) no gain is recognized by zed in this reorganization
b) zed reports a $ 50,000 recognized dividend
c) zed reports a $ 50,000 recognized capital gain
d) zed reports a $ 40,000 recognized dividend and a $ 10,000 capital gain
e) not enough info is available to determine proper treatment
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