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Ramon and Sophie are the sole shareholders of Gull Corporation. Ramon and Sophie each have a basis of $100,000 in their 2,000 shares of

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Ramon and Sophie are the sole shareholders of Gull Corporation. Ramon and Sophie each have a basis of $100,000 in their 2,000 shares of Gull common stock. When its E & P was $700,000, Gull Corporation issued a preferred stock dividend on the common shares of Ramon and Sophie, giving each 1,000 shares of preferred stock with a par value of $100 per share. At the time of the stock dividend, fair market value of one share of common stock was $150 and fair market value of one share of preferred stock was $75. If an amount is zero, enter "0". a. What are the tax consequences of the distribution to Ramon and Sophie? Ramon and Sophie have neither gain nor loss | in the amount of $ 250,000 X What is the basis for the common stock and preferred stock for each shareholder? Common stock: $ 45,000 X Preferred stock: $ 30,000 X

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