Sheldon owns 600 shares of the 1,000 shares outstanding of Hawk Corporation (E & P of $500,000). The remaining stock in Hawk is owned by several shareholders unrelated to Sheldon. In the current year, Hawk Corporation redeems 75 shares of Sheldon’s stock for $75,000. Sheldon had acquired all of his shares 10 years ago at a cost of $100 per share. What are the tax consequences to Sheldon and Hawk Corporation as a result of the stock redemption?

Answer rating: 100% (QA)

ANSWER Sheldon should report the complete 75000 distrib... View the full answer