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R Corporation, which has substantial E&P, redeems 50 of Ts 70 shares (basis of $100...

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Accounting

R Corporation, which has substantial E&P, redeems 50 of Ts 70 shares (basis of $100 per share) for $60,000. What effect does the redemption have on Ts taxable income and the basis for his stock, assuming the transaction qualifies as a sale?

a. T recognizes $55,000 capital gain and his basis in remaining stock is $2,000

b. T recognizes $60,000 capital gain and his basis in remaining stock is $2,000

c. T recognizes $60,000 dividend and his basis in remaining stock is $7,000

c. T recognizes $60,000 dividend and his basis in remaining stock is $2,000

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