Hazel, Emily, and Frank, unrelated individuals, own all of the stock in Wren Corporation (Earnings And Profits

Question:

Hazel, Emily, and Frank, unrelated individuals, own all of the stock in Wren (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 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 Income of $90,000.
(b) Frank has a Capital Gain of $90,000.
(c) Frank has Income of $150,000.
(d) Frank has a Capital Gain of $150,000.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
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