Buckeye Company is owned equally by James and his brother Terrelle, each of whom owns 400 shares in the company. Terrelle wants to reduce his ownership in the company, and it was decided that the company will redeem 300 of his shares for $3,300 per share on December 31, 20X3. Terrelle's income tax basis in each share is $1,500. Buckeye has current E&P of $12,500,000 and accumulated E&P of $22,500,000. What is the amount and character (capital gain or dividend) recognized by Terrelle because of the stock redemption?

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The Answer of Buckeye Company is owned equally by James and his brother Terrelle, each of whom owns 400 shares in the company. Terrelle wants to reduce his ownership in the company, and it was decided that the company will redeem 300 of his shares for $3,300 per share on December 31, 20X3. Terrelle's income tax basis in each share is $1,500. Buckeye has current E&P of $12,500,000 and accumulated E&P of $22,500,000. What is the amount and character (capital gain or dividend) recognized by Terrelle because of the stock redemption?

Buckeye Company Is Owned Equally by James and His Brother