Return of capital or capital gain


Ed owns 65 shares of ABC Corporation. Fred owns the other 35 shares. ABC redeems 31 of Ed's shares for a total purchase price of $31,000. ABC has earnings and profits of $22,000. Ed has a basis in his stock of $100 per share. How much of the redemption is a dividend, a return of capital or capital gain?

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Accounting Basics: Return of capital or capital gain
Reference No:- TGS039286

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