All of the stock in Robin Corporation (E & P of $800,000)is held by three unrelated individuals as follows: Shontelle has 300 shares,Marta has 200 shares,and Diego owns 500 shares.Robin Corporation redeems 200 of Diego's shares (basis of $10,000)for $40,000.If Diego's stock is a capital asset that has been held for the requisite holding period,he has a long-term capital gain of $30,000.

Question

Quizplus · Accepted Answer

Since Diego's basis for the 200 shares redeemed was $10,000, but Robin Corporation redeemed them for $40,000, he has a capital gain of $30,000. If the shares were held for more than one year (which is likely since it was not specified otherwise), it would qualify as a long-term capital gain. Therefore, the statement is true.

All of the Stock in Robin Corporation (E & P