The outstanding stock of Riccardo Corporation is owned as follows: $\begin{array} { l l }
\text { Robert } & \text { 100 shares } \
\text {Megan (Robert's daughter) } & 100 \text { shares } \
\text { Kyle (Robert's cousin)} & 100 \text { shares } \
\text { RMD, Inc. } &\underline{ \text { 100 shares }} \
\text { Total shares autstanding } & \text { 400 shares }
\end{array}$

Robert owns 50% of RMD, Inc.stock.The rest of RMD, Inc.stock is owned by unrelated parties.Riccardo Corporation redeems 90 of Kyle's shares of stock for $9,000 in the only redemption transaction this year.Kyle's basis for his stock is $10 per share.Riccardo Corporation has $300,000 in E&P.What is Kyle's total basis in his remaining 10 shares of stock after the redemption?

Question

The outstanding stock of Riccardo Corporation is owned as follows: $\begin{array} { l l } 
\text { Robert } & \text { 100 shares } \
\text {Megan (Robert's daughter) } & 100 \text { shares } \
\text { Kyle (Robert's cousin)} & 100 \text { shares } \
\text { RMD, Inc. } &\underline{ \text { 100 shares }}  \
\text { Total shares autstanding } & \text { 400 shares }
\end{array}$

Robert owns 50% of RMD, Inc.stock.The rest of RMD, Inc.stock is owned by unrelated parties.Riccardo Corporation redeems 90 of Kyle's shares of stock for $9,000 in the only redemption transaction this year.Kyle's basis for his stock is $10 per share.Riccardo Corporation has $300,000 in E&P.What is Kyle's total basis in his remaining 10 shares of stock after the redemption?

Quizplus · Accepted Answer

Kyle's basis in his remaining 10 shares would be $100, as he originally had 100 shares with a basis of $10 per share, making his total basis $1,000. After the redemption of 90 shares, the basis for the remaining 10 shares would still be $10 each, totaling $100.

The Outstanding Stock of Riccardo Corporation Is Owned as Follows