The outstanding stock of Riccardo Corporation is owned as follows: Robert owns 50% of RMD, Inc. stock. The rest of RMD, Inc. stock is owned by unrelated parties. Riccardo Corporation redeems 90 of Robert's shares of stock for $9,000 in the only redemption transaction this year. Robert's basis for his stock is $10 per share (100 shares @ $10 = $1,000). Riccardo Corporation has $300,000 in E&P. How much capital gain or dividend income does Robert recognize as a result of this redemption?

Question

The outstanding stock of Riccardo Corporation is owned as follows:  Robert owns 50% of RMD, Inc. stock. The rest of RMD, Inc. stock is owned by unrelated parties. Riccardo Corporation redeems 90 of Robert's shares of stock for $9,000 in the only redemption transaction this year. Robert's basis for his stock is $10 per share (100 shares @ $10 = $1,000). Riccardo Corporation has $300,000 in E&P. How much capital gain or dividend income does Robert recognize as a result of this redemption?

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The Answer of The outstanding stock of Riccardo Corporation is owned as follows:  Robert owns 50% of RMD, Inc. stock. The rest of RMD, Inc. stock is owned by unrelated parties. Riccardo Corporation redeems 90 of Robert's shares of stock for $9,000 in the only redemption transaction this year. Robert's basis for his stock is $10 per share (100 shares @ $10 = $1,000). Riccardo Corporation has $300,000 in E&P. How much capital gain or dividend income does Robert recognize as a result of this redemption?

The Outstanding Stock of Riccardo Corporation Is Owned as Follows