Crown Corporation has a total of $400$ shares of stock outstanding. Crown Corp redeems $100$ shares from its sole shareholder$-$ Charles. Charles' basis in his $400$ shares was $$400,000.$ Crown pays Charles $$300,000$ on $12\mathrm{.}31$ of the current year to redeem his stock. Crown had Current Year E & P of $$800,000$; and an Accumulated DEFICIT in E&P of $$(700,000).$ Charles asks $-$ How do it treat this $$300,000$ I got?

Okay $-$ How else can our shareholders "get their money back" on their investment? Have the CORP redeem some shares!

Crown Corporation has a total of $400$ shares of stock outstanding. Crown Corp redeems $100$ shares from its sole shareholder$-$ Charles. Charles' basis in his $400$ shares was $$400,000.$ Crown pays Charles $$300,000$ on $12\mathrm{.}31$ of the current year to redeem his stock. Crown had Current Year E & P of $$800,000$; and an Accumulated DEFICIT in E&P of $$(700,000).$ Charles asks $-$ How do it treat this $$300,000$ I got?

Dividend of $$100,000$

Dividend of $$300,000$

Capital Gain of $$200,000$

Capital Loss of $$(100,000)$