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14 April, 08:17

Since 2006, ben has owned all 100 outstanding shares of n and m corporation's stock. ben's basis for the stock is $50,000. in 2017, n and m have earnings and profits of $100,000. the corporation redeemed 25 shares of ben's stock for $75,000 in 2017. how will ben report this?

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  1. 14 April, 11:43
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    Ben will report $75,000 income in 2017.

    Explanation:

    Since Ben is a sole shareholder; still 100% owner after redemption of the stocks by N and M corporation.

    The redemption of $75,000 he received will be $75,000 dividend.

    Ben will report $75,000 as the entire amount is taxable as dividend.
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