Viking Corporation is owned equally by Sven and his wife Olga, each of whom hold 120 shares in the company. Viking redeemed 70 shares of Sven's stock for $1,500 per share on December 31, 20X3. Viking has total E&P of $450,000. What are the tax consequences to Viking because of the stock redemption?

Multiple Choice

• No reduction in E&P because of the exchange.

• A reduction of $105,000 in E&P because of the exchange.

• A reduction of $131,250 in E&P because of the exchange.

• A reduction of $262,500 in E&P because of the exchange.