What are the consequences of a stock redemption to the distributing corporation?
A)The corporation recognizes a gain or loss as if it had sold the distributed property for its FMV immediately before the redemption.
B)If the redemption is treated as a dividend, E&P is reduced in the same manner as for a regular dividend.
C)If the redemption is treated as a sale, only accumulated earnings and profits is reduced.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

If the redemption is treated as a dividend, the corporation's earnings and profits (E&P) are reduced in the same manner as for a regular dividend.

What Are the Consequences of a Stock Redemption to the Distributing