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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