Griffey Corporation has $40,000$ of accumulated EP and incurs a loss of $$30,000$ for the year. The loss

accrues ratably through the year. On June $1,$ Griffey Corporation distributes $40,000$ to its sole

shareholder, Ken. How much of the distribution will get dividend treatment? How much of the

distribution will reduce Ken$$s basis in his Griffey stock?

Dividend income: $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Reduction in stock basis: $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_$QUESTION $10($CHAPTER $19)$

Denny is a shareholder in Urban Corporation. Urban Corporation decides to redeem some of Denny's

stock. Prior to the redemption, Denny owns $58$ shares $($out of $100$ total shares outstanding$).$ Denny

originally paid $$10$ per share for the stock. Urban Corporation pays Denny $$820$ to redeem $17$ of his

shares.

$($a$)$ What is Denny's percentage ownership of Urban Corporation after the redemption?

$($b$)$ How much gain$/$income will Denny report as a result of the redemption?

$($c$)$ What type of income will this be$?$ Please circle the correct response.

dividend

capital gain

ordinary income