To carry out a stock redemption, Redbird Corporation transfers land held for investment purposes to Bob, its shareholder. The land had a basis of $150,000 and a fair market value of $30,000. Redbird has E&P of $200,000.

a. Redbird Corporation will recognize a loss of $120,000 on the redemption.

b. Redbird Corporation will recognize a loss of $30,000 on the transaction.

c. The transaction will be tax-free to Bob.

d. Redbird Corporation was wise in distributing the land rather than selling it.

e. None of the above.

EXPLAIN