The 100 shares of outstanding stock of Flash Corporation are owned by Barbara and Kelly, 70 and 30 shares respectively.Neither shareholder is related to the other.Each has a basis in her stock of $200 per share.During the year, Barbara sold 35 of her shares back to the corporation for $20,000.Assuming the corporation has substantial earnings and profits, Barbara's A.G.I.will increase by

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Since Barbara sold back her shares to the corporation, she received a payment from the corporation that is treated as a distribution to a shareholder, which is a dividend because the amount exceeds the shareholder's basis in the stock. The dividend amount is equal to the amount of cash received, which is $20,000 in this case. Therefore, Barbara's A.G.I. will increase by a dividend of $20,000.

The 100 Shares of Outstanding Stock of Flash Corporation Are