Ask Question
23 May, 22:25

Viking Corporation is owned equally by Sven and his wife, Olga, each of whom hold 100 shares in the company. Viking redeemed 75 shares of Sven's stock in the company on December 31, 20X3. Viking paid Sven $2,000 per share. His income tax basis in each share is $1,000. Viking has total E&P of $500,000. What are the tax consequences to Sven because of the stock redemption?

+3
Answers (1)
  1. 24 May, 01:03
    0
    The Tax Consequence for Viking Corporation for redeeming Sven's 75 shares at $2,000 each is a reduction of $150,000 in the Viking's Earnings and Profit.

    Explanation:

    Viking Corporation redeemed 75 shares out of Sven's 100 shares in the company. This means that Sven's ownership in Viking has reduced to 25 shares. In order to redeem the 75 shares from Sven, Viking paid $2,000 per share Total Paid for the 75 share = 75 x $2,000 = $150,000 Since Vikings's Total Earnings and Profit is $500,000, The payment of $150,000 to redeem Sven's stock will: Reduce the Earnings and Profit for tax consequesnces = $500,000 - $150,000 = $350,000 Summary, the Tax Consequence for Viking Corporation for redeeming Sven's 75 shares at $2,000 each is a reduction of $150,000 in the Viking's Earnings and Profit.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Viking Corporation is owned equally by Sven and his wife, Olga, each of whom hold 100 shares in the company. Viking redeemed 75 shares of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers