Question
Stacey, an individual taxpayer, is the majority owner of Dogwood Inc., a small privately-held C corporation. She comes to you explaining that she just received
Stacey, an individual taxpayer, is the majority owner of Dogwood Inc., a small privately-held C corporation. She comes to you explaining that she just received a distribution of cash from Dogwood in the amount of $15,000. She wants to know if this distribution of cash is taxable. After asking her, she tells you that the distribution was the result of a stock redemption. Which of the following is the most appropriate next question to ask her? a. Was it a pro-rata stock dividend? b. What was your ownership percentage before and after the redemption? c. Did the other shareholders redeem stock as well? d. None of the above questions seem appropriate.
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