Franks shares of stock

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Reference no: EM13121446

Hazel, Emily, and Frank, unrelated individuals, own all of the stock in Wren Corporation (Earnings And Profits (E&P) of \$900,000) as follows: Hazel, one hundred (100) shares of stock; Emily, one hundred (100) shares of stock and Frank, four hundred (400) shares of stock. Wren Corporation redeems one hundred fifty (150) of Frank's shares of stock (Adjusted Basis of \$60,000) for \$150,000. As a result of this transaction, which of the following is correct?

(a) Frank has Dividend Income of \$90,000.

(b) Frank has a Capital Gain of \$90,000.

(c) Frank has Dividend Income of \$150,000.

(d) Frank has a Capital Gain of \$150,000.

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