Question
James and his daughter are the sole owners of Wren Corporation. James terminates his entire stock ownership in Wren Corporation. One year later, James loans
James and his daughter are the sole owners of Wren Corporation. James terminates his entire stock ownership in Wren Corporation. One year later, James loans Wren Corporation $200,000. Because of the loan, the termination of Jamess stock ownership the year before can no longer be treated as a complete termination redemption. a. True. b. False.
Bluebird Corporation has 100 shares of stock outstanding. It redeems 40 shares for $200,000 at a time when it has paid-in capital of $150,000 and E&P of $200,000. What would be the reduction to E&P as a result of the redemption? a. $20,000. b. $80,000. c. $100,000. d. $200,000.
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