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Schweis, an individual, received Preferred Stock as a Non-Taxable Stock Dividend on the Common Stock she has held as an investment for four (4) years.

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Schweis, an individual, received Preferred Stock as a Non-Taxable Stock Dividend on the Common Stock she has held as an investment for four (4) years. The stock had a Section 306 Taint of $250,000 and Sctweis properly assigned a basis of $30,000 to the Preferred Stock. One (1) month after receiving the Stock Dividend, Schweis sells the Preferred Stock to Hide (an unrelated party) for \$290,000. Under these circumstances, which of the following is correct? Schweis has Ordinary Income of $250,000, a Tax-Free Return Of Capital of $30,000 and a Long-Term Capital Gain of $10,000. Schweis has Ordinary Income of $290,000. Schweis has Ordinary Income of $250,000 and a Tax-Free Return Of Capital of $40,000. Schweis has Ordinary Income of $250,000 and a Long-Term Capital Gain of $40,000

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