Viking Corporation is owned equally by Sven and his wife, Olga, each of whom holds 130 shares in the company. Viking redeemed 65 shares of Sven's stock for $1,600 per share on December 31, 20X3. Viking has total

E&P of $550,000. What are the tax consequences to Viking because of the stock redemption?

a) A reduction of $137,500 in E&P because of the exchange

b) A reduction of $275,000 in E&P because of the exchange.

c) No reduction in E&P because of the exchange.

d) A reduction of $104,000 in E&P because of the exchange.

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