Crown Corporation has a total of $400$ shares of stock outstanding. Crown Corp redeems $100$ shares from one of its shareholders $-$ Charles $-$ who owned just $25\%$ of the Crown Corp stock. Charles' basis in his $100$ shares was $$200,000.$ Crown pays Charles $$300,000$ on $12\mathrm{.}31$ of the current year to redeem his stock. Crown had Current Year E & P of $$50,000$; and an Accumulated DEFICIT in E&P of $$(700,000).$ Charles asks $-$ What is the tax consequence from this $$300,000$ I got for my $100$ shares?

Crown Corporation has a total of $400$ shares of stock outstanding. Crown Corp redeems $100$ shares from one of its shareholders $-$ Charles $-$ who owned just $25\%$ of the Crown Corp stock. Charles' basis in his $100$ shares was $$200,000.$ Crown pays Charles $$300,000$ on $12\mathrm{.}31$ of the current year to redeem his stock. Crown had Current Year E & P of $$50,000$; and an Accumulated DEFICIT in E&P of $$(700,000).$ Charles asks $-$ What is the tax consequence from this $$300,000$ I got for my $100$ shares?

Dividend of $$50,000$

Dividend of $$300,000$

Capital Gain of $$100,000$

Capital Gain of $$300,000$