Reference no: EM131723609

Question - Bobcat corp redeems all of zeds 4000 shares and distributes to him 2000 shares of van corps stock plus $ 50,000 cash. zeds basis in his 20% interest in bobcat is $100,000 and the stocks value is $ 250,000 at the time bobcat is acquired by van the accumulated earnings and profits of bobcat is $ 200,000 and of van are $ 75,000. How does Zed treat this transaction for tax purposes

a) no gain is recognized by zed in this reorganization

b) zed reports a $ 50,000 recognized dividend

c) zed reports a $ 50,000 recognized capital gain

d) zed reports a $ 40,000 recognized dividend and a $ 10,000 capital gain

e) not enough info is available to determine proper treatment