Required information [The following information applies to the questions displayed below.] Wildcat Company is owned equally by Evan Stone and his sister Sara, each of whom holds 1,000 shares in the company. Sara wants to reduce her ownership in the company, and it was decided that the company will redeem 500 of her shares for $25,000 per share on December 31 of this year. Sara's tax basis in each share is $5,000. Wildcat has current E&P of $10,000,000 and at the beginning of the year accumulated E&P is $50,000,000. a. What are the amount and character (capital gain or dividend) recognized by Sara as a result of the stock redemption? Answer is complete but not entirely correct. Capital gain $ 20,000